Stone Brewing Company has agreed to pay a more than $1.8 million offer in compromise to the federal Alcohol and Tobacco Tax and Trade Bureau for alleged violations related to tax reporting and payments.
According to the TTB, the Escondido, California-headquartered craft brewery committed several infractions between July 1, 2017, and January 31, 2020, that totaled more than $2.7 million.
The TTB said among those alleged violations were:
- “Underpaid taxes, including misapplication of reduced tax rates, non-payment of excise taxes on inventory shortages, non-payment of excise taxes due on unsubstantiated exports, and non-payment of excise taxes on certain other removals;
- “Failed to timely file excise tax returns and timely submit excise taxes;
- “Failed to submit complete information on export documentation;
- “Failed to timely submit Brewer’s Report of Operations and submit accurate operations reports;
- “Failed to maintain sufficient bond coverage.”
Those violations allegedly occurred at Stone’s production facilities in Escondido, California, and Richmond, Virginia, as well as its outposts in San Diego and Napa.
The TTB agreed to accept Stone’s offer in compromise, which totals $1,804,430.75, on March 10.
“In regards to our offer in compromise, we made an honest mistake with absolutely no ill intentions,” a Stone spokesperson told Brewbound. “We’re glad to have reached an amicable settlement with the TTB.”
The tax offer in compromise trails settlements made by larger beer manufacturers in recent years for other types of alleged infractions, including trade practice violations.
Last July, Anheuser-Busch agreed to pay the TTB a record $5 million offer in compromise for alleged trade practice violations related to sports and entertainment sponsorships, while Heineken USA paid a $2.5 million offer in compromise to the TTB in April 2019 for trade practice violations related to its “Brew Lock” draft systems.
Stone ranked as the nation’s ninth largest craft brewery by volume, producing 395,000 barrels of beer, in 2019, the most recent year in which volume data was available via the Brewers Association (BA).
As an organization, Stone has been in a process of transformation since former Lagunitas CEO Maria Stipp took over the top post in September 2020, succeeding Dominic Engels, who departed the company a month earlier.
Last month, the company added former wine, spirits and cannabis executive Erin Smith as its VP of marketing. Smith’s arrival followed the announcement of a reorganization of Stone’s sales and marketing teams. Under the new structure, Smith and a yet-to-be-hired vice president of sales will report to Stipp. The reorganization made the company’s chief commercialization officer role obsolete and Dan Lamb, who had held that title, departed the company earlier this month.