Minimum Version Required: 23.09
Pre-Conditions
This document guides users through the configuration of core data like Tax Entities, Product Types, Suppliers, Brand Families, Brands, Products, Vendors, & Customers to ensure accurate representation of all spirit production and removal data required for the Federal TTB Distiller's Report of Operations (DRO).
Steps
Configuring Tax Entities
Set up Tax Entity records that represent your Distilled Spirits Plant (DSP) license
Add a separate Tax Entity record for each Distilled Spirits Plant (DSP) that you produce spirits under in your distillery
Enter the following information:
Tax Entity - The name of your Distilled Spirit Plant (DSP)
License Number - TTB defined DSP license number
FEIN - Your Federal Employer Identification Number
Configuring Product Types
The common Product Types that we suggest setting up for reporting spirits on the TTB DRO include:
Wash Pre-Distillate - fermented wash that will be distilled into a spirit
WIP Low Wines - unfinished spirits produced on the first stripping distillation run
WIP Hearts - finished spirits produced on the spirit distillation run
WIP Feints (Heads/Tails) - unfinished spirits produced on the spirit distillation run. These unfinished spirits will either be redistilled or dumped
WIP Bulk Spirits - represents finished spirits purchased in bulk. These finished spirits will either be blended, barrel-aged, or redistilled
Link Tax Entities to Product Types:
Assign the spirits Product Types that are split by production partner to their appropriate Tax Entity (DSP) using the Locations Product Types table.
In this example we can see that in the ‘Krill Brewing & Distilling’ Location:
‘Wash Pre-Distillate’ will not report on either DSP’s TTB DRO.
‘IS’ Product Types will report under DSP: DRO-CO-ISD-99
All ‘KD’ Product Types will report under DSP: DRO-CO-KRD-01
Configuring Brands
1. Create a Supplier for each spirit production partner. Continue using production partner prefixes
2. Create a BrandFamily for each spirit being produced and another for bulk WIP spirits being purchased for blending, like GNS. Continue using production partner prefixes
3. Create separate spirit Brands for each phase of the distillation process, as well as for packaging material, for example: September 2023 TTB DRO Configuration 6
Wash Pre-Distillate - fermented wash that will be distilled into a spirit.
○ TTB Category = Not set because not reported on DRO
Low Wines - unfinished spirits produced on the first stripping distillation run
○ TTB Category = Unfinished Spirit for the spirit type in question
Feints - unfinished spirit that will either be redistilled or dumped
○ TTB Category = Unfinished Spirit for the spirit type in question
Hearts Full Strength - hearts at full strength coming off of the still
○ TTB Category set to appropriate spirit type. Do not use ‘Unfinished Spirit’
Hearts Barrel Proofed - hearts proofed down to barrel strength
○ TTB Category set match the ‘Hearts Full Strength’ Brand of this spirit type
Bottle Proofed - aged spirit proofed down to bottle strength
○ TTB Category set match the ‘Hearts Full Strength’ Brand of this spirit type
Packaging Material - represents all brand-specific packaging material for this September 2023 TTB DRO Configuration 7 spirit
○ TTB Category not set.
Configuring Vendors
Transfer-in-Bond Vendors Vendors are categorized with a TTB Tax Code that helps differentiate between different types of transactions on the DRO. Important TTB Tax Codes values for the TTB DRO include:
Received in Bond - Represents a spirit inventory transaction where your DSP will assume the proof gallon tax liability, aka a Transfer-in-Bond transaction. Set on all Vendors that will provide you spirits ‘in bond’
When the Vendor TTB Tax Code is left blank, the purchase transactions from this Vendor represent tax-paid receipts. This may occur if purchasing finished good spirits for resale, where the previous DSP paid taxes at the time of shipping you the inventory.
Production Partner Vendors Recipes built for contract production partners should have a Vendor set on the Recipe Version. Setting up a Vendor for each contract production partner allows receiving raw material inventory from the production partner for future production. Set the following fields on Vendor records representing a production partner:
TTB Tax Code = Received in Bond
Is Production Partner = True
○ This is required to be able to set the Vendor on the Recipe VersionDoing so will ensure all inventory created from this recipe will be created under this production partner Vendor.
Configuring Customers
Customers are categorized with a TTB Tax Code that the DRO uses to categorize different types of withdrawals. Important TTB Tax Codes for the DRO include:
Laboratory Samples - Set on Customer(s) that is used to Invoice spirit inventory consumed for the purpose of lab samples
Transfer to Distillery - Customers are cate
Unfit for Sale - Set on Adjustment Customer(s) that will be used when writing off inventory for the reason of ‘unit for sale’
Research and Development - Set on Customer(s) that is used to Invoice spirit inventory consumed for the purpose of R&D
Consumed on Premise - Set on Customer(s) that represent an on-premise tasting room
Destroyed - Set on Adjustment Customer(s) that will be used when writing off inventory for the reason of ‘destroyed’
Overage or Shortage - Set on generic Adjustment Customer(s) that are used for general inventory adjustments from inventory discrepancies when counting
Used as Supplies - Set on Customer(s) that will be used to Invoice spirit inventory consumed as supplies, like cleaning supplies
Export - Set on Customers that will be used to deplete spirit inventory to an international business partner
DRO Storage Loss - Set on the Customer that will collect proof gallon loss during storage, like angel's share during barrel aging. These proof gallon losses are reported on the TTB DRO Storage Line 22. Other Losses
DRO Processing Bulk Loss - Set on the Customer that will collect proof gallon loss when packaging bulk spirits into a bottle. These proof gallon losses are reported on the TTB DRO Processing Part I Bulk Ingredients - Line 24. Losses
DRO Processing FG Loss - Set on the Customer that will collect proof gallon loss from broken finished goods. These proof gallon losses are reported on the TTB DRO Processing Part II Finished Products - Line 44. Recorded Losses
Removed Without Payment of Tax - Set on transfer Customers that will be used to deplete spirit inventory on intercompany transfer Invoices. This represents an outbound transfer-in-bond
None - Set on all ‘sale-type’ Customers that you will be shipping spirits, tax paid. These proof gallons are reported on the DRO Processing Part II Finished Products - Line 33. Withdrawn Tax Determined.
Best Practices
We suggest creating separate Product Types for each production partner producing spirits in the facility. Define a unique prefix for each production partner, including your primary distillery, and use that prefix when setting up Product Types, Suppliers, Brand Families, and Brands.
Why?
This helps separate inventory ownership, and allows linking specific Product Types to Tax Entities (DSP’s) for proper TTB DRO reporting. Separating Products in this way also provides more flexibility in account mapping.
‘KD’ represents Product Types for my distillery ‘Krill Distilling’
‘IS’ represents Product Types for our distilling contract partner ‘Island Sun Distilling’
1. Set these Product Type fields for proper TTB DRO reporting:
a. TTB Process Type
i. Set to ‘Produced’ for bulk WIP spirits, whether made or purchased
ii. Set to ‘Packaged’ for FG spirits
iii. Set to ‘Not Set Yet’ for ‘Wash Pre-distillate’ or other Product Types that should not report on the DRO
b. TTB Process Category - auto-populates based on the TTB Process Type
c. Track Inventory = True September 2023 TTB DRO Configuration 3
d. Type Code = Spirits e. Store in Equipment - set to ‘True’ for all WIP (not FG) Product Types.
2. Set these Product fields for proper TTB DRO reporting:
a. Track Batch Codes = True