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TTB Accepts $28 Million Settlement from Levecke Corporation

Writer's picture: James NiekampJames Niekamp

Updated: Dec 8, 2021

Levecke Corporation (“Levecke”) was recently hit by a TTB audit and settled what appears to be a record settlement in the amount of $28 million.


As it typically does, TTB released an abstract and statement of the settlement agreement. This information indicated that Levecke had violated several federal regulations, including miscalculation of flavor credits and unexplained inventory shortages, as well as failure to timely file excise tax returns and failure to pay excise tax returns.


Importantly, however, there was a violation mentioned as an improper use of CBMA credit with a control group in violation of 26 USC 5001(c).


Although it is difficult to ascertain the full scope of the violation, one can surmise that this comes down to the TTB single taxpayer rule that has come into effect since January 2018. This rule has been fraught with confusion and part of which is due to the fact that it is very ambiguous as to who is required to pay the higher excise tax rate.


Regardless this appears to be the highest settlement ever paid to TTB. The assessment of approximately $40 million, was settled for over $28 million by the tax audit division.


What is the lesson for the industry going forward? Please understand that the single taxpayer rule is still amorphous and difficult to fully understand. We expect a lot of confusion within the industry, and more settlements on the horizon.

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