Prior to its acquisition by Evil Genius Beer Company, 21st Amendment Brewery reached a major settlement with the Alcohol and Tobacco Tax and Trade Bureau (TTB), agreeing to pay $423,681.93 to resolve years of unpaid federal excise tax obligations.

As first reported by Brewbound, the agreement was finalized through an Offer in Compromise, a legal process that allows the federal government to settle certain tax debts for less than the full amount owed when collecting the entire balance is unlikely or when there is a legitimate question about the amount owed.

According to the TTB, the brewery failed to file and pay federal excise taxes on time between 2018 and 2025. The agency said the unpaid taxes and related penalties grew to more than $1.2 million before the settlement was reached.

The liabilities were tied specifically to 21st Amendment’s former production brewery in San Leandro, California, not to the company’s well-known San Francisco brewpub.

The settlement also comes after a period of significant change for the brewery.

Earlier this year, 21st Amendment ceased operations before its brands and intellectual property were acquired by Evil Genius Beer Co. That transaction did not include the San Leandro production facility where the tax liabilities originated, making the settlement separate from the brewery’s new ownership.

An Offer in Compromise is relatively uncommon in the beverage alcohol industry. The TTB generally approves these agreements only when a taxpayer can demonstrate that paying the full amount would be unrealistic or when there is a genuine dispute over the amount legally owed. In this case, the agency accepted a settlement of roughly one-third of the original assessment.

While a settlement exceeding $400,000 is substantial, it is far from the largest tax enforcement action the TTB has pursued.

Over the years, the agency has reached several high-profile settlements involving breweries, wineries and distilled spirits producers. In one of the largest beer-related cases, the former owners of Oregon’s Cartwright Brewing reached a settlement after years of unpaid federal excise taxes that accumulated following the brewery’s closure. Other breweries have faced six-figure assessments after failing to remit excise taxes despite continuing production, with the TTB routinely using tax liens, license actions and Offers in Compromise to recover at least a portion of the outstanding debt.

Industry observers may also remember enforcement actions involving New Jersey’s Claremont Brewing Co. and several regional craft breweries during the industry’s rapid expansion in the 2010s. Many of those cases shared a similar pattern. Breweries struggling with cash flow fell behind on excise tax payments, continued operating while the debt grew, and ultimately negotiated settlements after closing or restructuring.

Federal excise taxes are one of the few obligations breweries collect and owe on a regular basis, making them a priority for regulators. Unlike income taxes, beer excise taxes are tied directly to production and are generally due shortly after beer is removed for sale. Failure to make those payments can quickly trigger penalties and interest, allowing relatively modest unpaid balances to snowball into much larger debts over several years.

The 21st Amendment settlement serves as yet another reminder that even well-known craft breweries are not immune to government responsibilities. And as margins tighten across the industry and more breweries face restructuring or ownership changes, keeping current on federal excise tax obligations remains one of the most important duties for any brewery hoping to stay in business.