How to Properly Record Destruction of Finished Products and Bulk Spirit

Occasionally distilleries need to destroy finished products or bulk spirit resulting from contamination, broken bottles or other issues. It is important to know that distilleries can only voluntarily destroy spirits in accordance with 27 CFR § 19.459 - Voluntary Destruction and 27 CFR § 19.617 - Destruction Records. See excerpt from 27 CFR 19.617 below:

IMPORTANT: If finished products or bulk spirits are destroyed, it's critical that the required documentation is maintained otherwise excise taxes are due on all the spirits reported as destroyed. See 27 CFR § 19.461 - Losses and Shortages in General for more information.

Lastly, distilleries must also file a claim with the associated destruction and receive approval of the claim from the TTB before taking a decreasing adjustment on the Excise Tax Return. The claim should include all pertinent information including: date, time, place, manner of destruction, name and title of DSP representative who supervised destruction, and DSP permit number.

Source: https://www.ttb.gov/distilled-spirits/common-compliance-and-tax-issues-surrounding-distilled-spirits-plant-dsp-audits