US craft brewer Pyramid Breweries has agreed to pay US$700,000 in unpaid tax.

The Seattle-based company said yesterday (5 October) that it has agreed with the federal Alcohol and Tobacco Tax and Trade Bureau that it will pay US$700,000 following the bureau's audit of its federal tax returns.

Having completed audits of Pyramid's facilities in Portland, Berkeley and Seattle, the bureau concluded that Pyramid and not Portland Brewing Company was the legal brewer at the facility and that the federal tax on beer production at the Portland brewery had been underpaid from January 2005 to May this year.

Pyramid will end its contract brewing and other commercial relationships with Portland Brewing and will take charge of all brewery and alehouse operations at Pyramid's brewery and alehouse facilities in Portland, Oregon. Pyramid expects to be the brewer of record at its Portland facility within 60 days.

The company said that it will recognise the US$700,000 assessment as a charge to earnings for the quarter ending 30 September. "The company anticipates that its current operating cash flows and other sources of liquidity will be sufficient to enable it to satisfy the payment terms," Pyramid said.

In August, Pyramid posted a slide in second-quarter profits following the resignation of its CEO, John Lennon. Net income for the three months to 30 June came in at US$28,000, although stripping out the costs linked to Lennon's departure resulted in income more than doubling to US$401,000.