Alcohol Fuel Plant FAQs
General
AFP1: What is an Alcohol Fuel Plant (AFP)?
What is an AFP?
An AFP is a type of distilled spirits plant (DSP) that is authorized under 26 U.S.C. 5181 and established under 27 CFR, part 19, subpart X, solely for producing, processing, and storing, and using or distributing distilled spirits to be used exclusively for fuel use.AFP2: What is fuel alcohol?
What is fuel Alcohol?
The TTB regulations (27 CFR, part 19, subpart X) define fuel alcohol as distilled spirits which have been made unfit for beverage use at an AFP as provided in 27 CFR, part 19, subpart X. The regulations authorize the use and required level of certain materials that may be used for making distilled spirits unfit for beverage use. See AFP7. Since AFPs may not produce or use distilled spirits derived from petroleum, natural gas, or coal, as prescribed by Section 5181, fuel alcohol may not be produced with distilled spirits that were derived from petroleum, natural gas, or coal.AFP3: What does it mean to make distilled spirits unfit for beverage use?
What does it mean to make distilled spirits unfit for beverage use?
The TTB regulations (27 CFR, part 19, subpart X) define the phrase “make unfit for beverage use” as the addition to distilled spirits of materials which will preclude their beverage use without impairing their quality for fuel use as prescribed and authorized by the provisions of 27 CFR, part 19, subpart X. The term “render” is interchangeable with the term “make” and is used in some sections of 27 CFR, part 19, subpart X.AFP4: Are there different AFP sizes? If so, what are they?
Are there different AFP sizes? If so, what are they?
Yes, there are different AFP sizes depending on the amount of distilled spirits the AFP produces and receives per year. TTB has the authority to create guidelines for AFPs of different sizes. The statute (26 U.S.C. 5181) specifically refers to “small plants.” Our regulations define small, medium, and large plants. The definitions of small, medium, and large plants are:- Small plants. A small alcohol fuel plant (small plant) is a plant which produces and/or receives not more than 10,000 proof gallons of spirits per calendar year.
- Medium plants. A medium alcohol fuel plant (medium plant) is a plant which produces and/or receives more than 10,000 but not more than 500,000 proof gallons of spirits per calendar year.
- Large plants. A large alcohol fuel plant (large plant) produces and/or receives more than 500,000 proof gallons of spirits per calendar year.
AFP5: What is the difference between fuel alcohol and completely denatured alcohol formula number 20 (CDA 20)?
What is the difference between fuel alcohol and completely denatured alcohol formula number 20 (CDA20)?
Fuel alcohol and CDA 20 are both products that are authorized only for fuel use, but they are different in several key ways. The primary distinction between fuel alcohol and CDA 20 is that fuel alcohol is produced on AFP premises and CDA 20 is produced on DSP premises. A second significant difference is that fuel alcohol is produced under the formula prescribed in 27 CFR 19.746. Section 19.746 allows for the use of 2 gallons or more of authorized materials per 100 gallons of distilled spirits of any proof. The formula for CDA 20 is set forth in 27 CFR 21.24. Section 21.24 requires that exactly 2 gallons of authorized material be added to every 100 gallons of distilled spirits of not less than 195 proof. A third distinction between fuel alcohol and CDA 20 is the list of authorized materials for each. See AFP7 for a complete list of the approved fuel alcohol materials.AFP6: How long does an AFP permit last, and can an AFP permit be revoked or suspended?
How long does an AFP permit last, and can an AFP permit be revoked or suspended?
The regulation at 27 CFR 19.679 provides that an AFP permit is continuing unless automatically terminated under 27 CFR 19.684, suspended or revoked as provided in 27 CFR 19.697, or voluntarily surrendered. In accordance with § 19.684, automatic termination of an AFP permit occurs when the lease, sale, or other transfer of business operations occurs. In the case of a corporation holding an AFP permit, if actual or legal control of the permittee corporation changes, directly or indirectly, whether by reason of change in stock ownership or control (in the permittee corporation or in any other corporation), by operation of law, or in any other manner, the permit may remain in effect until the expiration of 30 days after the change, whereupon the permit will automatically terminate. However, if operations are to be continued after the change in control, and an application for a new permit is filed within 30 days of the change, then the outstanding permit may remain in effect until final action is taken on the new application. When final action is taken on the application, the outstanding permit automatically terminates. In accordance with § 19.697, the TTB may revoke or suspend an AFP permit if the appropriate TTB officer has reason to believe that the proprietor:- Has not in good faith complied with the applicable provisions of 26 U.S.C. Chapter 51, or 27 CFR, part 19, subpart X; or
- Has violated conditions of the permit; or
- Has made any false statements as to any material fact in the application thereof; or
- Has failed to disclose any material information required to be furnished; or
- Has violated or conspired to violate any law of the U.S. relating to intoxicating liquor or has been convicted of any offense under Title 26, U.S.C. punishable as a felony or of any conspiracy to commit such offense.
Unfit for Beverage Use
AFP7: Which materials are authorized for making distilled spirits unfit for beverage use?
Which materials are authorized for making distilled spirits unfit for beverage use?
AFPs must render spirits unfit for beverage use using materials listed in the TTB regulations or on TTB’s website. Section 19.746 of the TTB regulations lists authorized materials and related requirements for rendering spirits unfit for beverage use at AFPs. Authorized materials include automotive gasoline and natural gasoline. If an AFP proprietor wishes to use materials that are not listed in the regulations or on TTB’s website, the proprietor may apply for approval to use the materials under section 19.747 of the TTB regulations.AFP8: How are distilled spirits rendered unfit for beverage use?
How are distilled spirits rendered unfit for beverage use?
Distilled spirits are made (rendered) unfit for beverage use by mixing the distilled spirits with authorized materials at the prescribed level.AFP v. DSP
AFP9: What are some of the main differences between an AFP and a DSP?
What are some of the main differences between an AFP and a DSP?
Though an AFP is a type of DSP, there are significant differences between the two types of plants. The main difference is the activities that are authorized at each; but there are also differences in qualification, bonding, and recordkeeping. The following table contains examples of some of the differences between an AFP and a typical DSP. This table is only intended to provide a broad overview of said differences. For more details on the differences, please see TTB G 2011-1.| AFP | DSP | |
| Authorized activities | * Receive and produce distilled spirits for the purposes of rendering them unfit for beverage use for fuel use. | * Receive and produce distilled spirits. * Produce and warehouse beverage distilled spirits. * Produce specially and completely denatured distilled spirits for industrial use. * Produce tax-free distilled spirits. * Manufacture articles. * Receive wine on bonded premises. * Receive beer/malt beverages on bonded premises. |
| Bond requirements | An AFP that produces and/or receives not more than 10,000 proof gallons of distilled spirits per year is not required to obtain a bond. However, an AFP without production operations that receives less than 10,000 proof gallons of distilled spirits per year must furnish a bond in accordance with 27 CFR 19.699. AFPs that produce and/or receive more than 10,000 proof gallons of distilled spirits per year are required to obtain a bond. For more information see the FAQs pertaining to bonds. | Except as provided in 27 CFR 19.151(d), every person intending to establish a distilled spirits plant shall file a bond prescribed in 27 CFR part 19, subpart F. |
| Taxes | As long as fuel alcohol is produced in accordance with 27 CFR, part 19, subpart X, and used for fuel purposes, no taxes are due. | Unless the DSP withdraws the spirits on a non-taxpaid basis, a DSP owes taxes on distilled spirits withdrawn from bonded premises. Generally, the tax rate is $13.50 per proof gallon. |
Taxes
AFP10: Are taxes due on fuel alcohol?
Are taxes due on fuel alcohol?
As long as the fuel alcohol is withdrawn from an AFP under the provisions of 27 CFR, part 19, subpart X, taxes are not due. The statutory provisions of 26 U.S.C. 5181 allow the withdrawal of distilled spirits from AFP premises free of tax exclusively for fuel use, as provided in 26 U.S.C. 5214(a)(12). As provided in 27 CFR 19.669, tax will be due if spirits are diverted to beverage use or other unauthorized dispositions.Bonds
AFP11: Are there bond requirements for AFPs?
Are there bond requirements for AFPs?
Yes, there are bond requirements for AFPs, except for small AFPs with production operations. Under 26 U.S.C. 5181, bonds are required for AFPs except AFPs that produce distilled spirits exclusively for fuel use and do not produce more than 10,000 proof gallons per year. TTB’s regulations define a small AFP as a plant that produces (including receives) not more than 10,000 proof gallons of spirits per calendar year. Because 26 U.S.C. 5181 exempts certain AFPs from bond requirements only if they actually produce spirits, a bond is required for small AFPs without production operations. The penal sum of the bond is prescribed in 27 CFR 19.700.AFP12: Do AFPs of different sizes require bonds of different amounts?
Do AFPs of different sizes require bonds of different amounts?
Yes. Medium and large AFPs are required to obtain a bond. The bond amount is dependent on the quantity of spirits that the AFP will produce and/or receive in a calendar year. In accordance with §§ 19.675 and 19.676, a bond of sufficient sum, as prescribed in § 19.700, is required for medium and large AFPs. The bond must be filed on TTB F 5110.56 and can be submitted with the application. The bond must be submitted and approved before a permit is issued. The permit application (including the bond form) may be completed using TTB’s Permits Online system. The terms and conditions of a bond state that that the person furnishing the bond will faithfully comply with all provisions of law and regulations relating to the activities covered by the bond, and will pay all taxes imposed by the IRC and all penalties incurred or fines imposed for violations of any such provision of the IRC relating to the activity covered by the bond.AFP13: What is the bond amount for a small AFP that does not have production operations?
What is the bond amount for a small AFP that does not have production operations?
In accordance with § 19.700, the penal sum for a bond of a small plant that does not have production operations is $1,000.AFP14: How do I calculate a sufficient bond for a medium AFP?
How do I calculate a sufficient bond for a medium AFP?
As stated in § 19.700, to find the required amount of a bond for a medium AFP, estimate the total proof gallons of spirits to be produced and received in a calendar year. The amount of the bond is 2,000 and a maximum of $50,000. The following table provides some examples:| More than | But not over | Amount of Bond |
| 10,000 | 20,000 | $ 2,000 |
| 20,000 | 30,000 | 3,000 |
| 90,000 | 100,000 | 10,000 |
| 190,000 | 200,000 | 20,000 |
| 490,000 | 500,000 | 50,000 |
AFP15: How do I calculate a sufficient bond for a large AFP?
How do I calculate a sufficient bond for a large AFP?
As stated in § 19.700, to find the required amount of a bond for a large AFP, estimate the total proof gallons of spirits to be produced and received in a calendar year. The amount of the bond is 2,000 for each 10,000 proof gallons (or fraction) over 500,000. The maximum bond is $200,000. The following table provides some examples.| More than | But not over | Amount bond |
| 500,000 | 510,000 | $ 52,000 |
| 510,000 | 520,000 | 54,000 |
| 740,000 | 750,000 | 100,000 |
| 990,000 | 1,000,000 | 150,000 |
| 1,240,000 | 200,000 |
AFP16: What is the point of bonds? Why are they required for medium and large plants?
What is the point of bonds? Why are they required for medium and large plants?
Under 26 U.S.C. 5001, tax is imposed on distilled spirits as soon as the spirits are produced or imported. Therefore, though tax is not collected on distilled spirits lawfully produced and used for fuel use, section 5001 and other provisions of the Internal Revenue Code impose liability for tax on distilled spirits upon production of the spirits. Bonds provide the Government with security against the possible loss of tax revenue.Registration of Stills
AFP17: How does an AFP proprietor register a still?
How does an AFP proprietor register a still?
In accordance with § 19.680, the description of stills on the approved alcohol fuel producer’s permit (TTB F 5110.74) application constitutes registration of stills. The permit application may be completed electronically using TTB’s Permits Online system.AFP18: Does an AFP proprietor have to amend his/her permit if he/she relocates the still listed on the permit?
Does an AFP proprietor have to amend his/her permit if he/she relocates the still listed on the permit?
Yes. A change in type or location of a still constitutes amendment of the permit. Permits can be amended on TTB F 5110.74. You may also consult TTB’s Permits Online webpage for more information about whether the permit can be amended electronically.Withdrawing and Transferring
AFP19: Can distilled spirits that are not rendered unfit for beverage use be legally withdrawn from an AFP?
Can distilled spirits that are not rendered unfit for beverage use be legally withdrawn from an AFP?
No. The provisions of 27 CFR 19.728 require that before spirits may be withdrawn from an AFP, they must be made unfit for beverage use as provided in 27 CFR, part 19, subpart X. Specifically, § 19.746 lists the authorized materials for rendering distilled spirits unfit for beverage use. Further, 27 CFR 19.726 states that no person shall withdraw, use, sell, or otherwise dispose of distilled spirits (including fuel alcohol) produced under 27 CFR, part 19, subpart X for other than fuel use. As discussed in AFP23 below, criminal penalties apply to persons who withdraw, use, sell or otherwise dispose of distilled spirits (including fuel alcohol) produced under 27 CFR, part 19, subpart X for uses other than fuel use.AFP20: Can distilled spirits that have not been rendered unfit for beverage use be transferred from an AFP to a DSP or another AFP? If so, how?
Can distilled spirits that have not been rendered unfit for beverage use be transferred from an AFP to a DSP or another AFP? If so, how?
Yes, with certain restrictions provided for in 27 CFR 19.733, distilled spirits that have not been rendered unfit for beverage use may be transferred from an AFP to a DSP or another AFP. In contrast to fuel alcohol that is withdrawn tax-free from the bonded premises of an AFP, the tax liability of spirits that are “transferred in bond” to a DSP or another AFP is at all times covered by the bond of a TTB permittee. Such transfers are not considered to be withdrawals. Distilled spirits that have not been rendered unfit for beverage use may be transferred in bond from an AFP to a DSP or another AFP. However, after the transfer, the spirits must be rendered unfit for beverage use prior to withdrawal and may only be used for fuel purposes after withdrawal. In addition, each DSP or AFP that wishes to receive spirits under a transfer in bond from an AFP must obtain a one-time approval using TTB F 5100.16 (“Application for Transfer of Spirits and/or Denatured Spirits in Bond”) in order to receive spirits from that AFP. Other requirements relating to transfers in bond from AFPs are contained in 27 CFR 19.726, 19.734, 19.735, and 19.736.Records and Reports
AFP21: Are there required records and reports for AFPs?
Are there required records and reports for AFPs?
Yes, there are required records and reports for AFPs. The regulations pertaining to records and reports for AFPs are located in:- 27 CFR 19.710, Inventories of spirits;
- 27 CFR 19.714, General requirements for records;
- 27 CFR 19.715, Format of records;
- 27 CFR 19.716, Maintenance and retention of records;
- 27 CFR 19.717, Time for making entries in records;
- 27 CFR 19.718, Required records;
- 27 CFR 19.719, Spirits made unfit for beverage use in the production process; and
- 27 CFR 19.720, Reports.