SubscribeOn August 12, 2019, the Alcohol and Tobacco Tax and Trade Bureau (TTB) published its updated Formula and Process for Nonbeverage Product, TTB Form 5154.1. The Nonbeverage Product approval process is critical to obtain “drawback” (a refund) on most of the alcohol excise tax on distilled spirits used to make such products deemed “unfit for beverage purposes.” The Nonbeverage Formula Form accordingly is important to producers of flavorings and extracts, soft drink concentrates and other non-beverage products made using potable alcohol. (more…)
Alcohol Excise Taxes
TTB Publishes NPRMs to Repeal Standards of Fill for Wine and Distilled Spirits
On Monday, July 1, 2019, the Alcohol and Tobacco Tax and Trade Bureau (TTB) published two eagerly anticipated notices of proposed rulemaking (NPRMs) to largely repeal the standards of fill for wine and distilled spirits containers. The highlights: (more…)
Winds of Change Blowing for Craft Brewers
For those who follow developments in the law and craft brewing with equal passion, every year has its share of substantial issues. This year has been no exception, with a pending Supreme Court case; a substantial upswing in federal trade practice enforcement activity; a massive rewrite of US Tax and Trade Bureau (TTB) labeling and advertising regulations; and prospects for extending the biggest cuts in the excise tax on beer since the repeal of Prohibition.
As these developments play out over the next year, we may see changes translate into the marketplace. Find out what you can expect.
Originally published in The New Brewer, May/June 2019.
TTB Spring 2019 Updates to Semi-Annual Regulatory Agenda
The spring edition of the federal government’s semi-annual Unified Agenda of Federal Regulatory and Deregulatory Actions (Regulatory Agenda) has been published. Like other federal agencies, the Alcohol and Tobacco Tax and Trade Bureau (TTB) uses the Regulatory Agenda to report on its current rulemaking projects.
The Regulatory Agenda provides glimpses into TTB’s policy focus and aspirations. But, readers should recognize that TTB rulemaking moves very slowly, and the Agency often does not meet the aspirational dates published in the Regulatory Agenda. (more…)
Further CBP Guidance on Craft Beverage Modernization Act
Earlier this week, US Customs and Border Protection (CBP) issued further guidance on the procedures for importers to take the lower tax rates and credits available under the Craft Beverage Modernization Act (CBMA).
Key points of the new guidance:
- CBP will process drawback claims on an oldest-entry-first basis.
- Failure to substantiate drawback claims by January 31, 2019, risks a loss of the CBMA rates/credits for the entries in question.
- Going forward, every entry seeking to claim CBMA rates/credits must be accompanied by a CBMA Spreadsheet based on a template provided by CBP.
- Each importer must also submit a Controlled Group Spreadsheet, based on a template provided by CBP, for each controlled group it belongs to (foreign producers have the option of providing this information directly to CBP). Importers are responsible for immediately reporting to CBP any changes to the information in the Controlled Group Spreadsheet.
- Each foreign producer must provide their importer or CBP with an Assignment Certification based on a template provided by CBP.
With this guidance, importers can now start benefiting from the CBMA lower rates and credits on entries going forward, and make drawback claims for imports entered since January 1, 2018.
New CBMA Guidance Further Clarifies Excise Tax Rules for Imported Beverages
Last week Customs & Border Protection (CBP) issued additional guidance on the Craft Beverage Modernization Act (CBMA) rules for applying the CBMA lower excise tax rates (for beer and distilled spirits) and credits (for wine) to alcohol beverages imported from other countries.
The new guidance provides further clarity on the procedures required to make claims for drawback (refund) of taxes paid at the non-CBMA rate on product imported since the beginning of calendar 2018. It also indicates that CBP expects to provide additional guidance this month (October) on taking the lower rates and credits contemporaneously with importing additional product going forward. Among other things, CBP apparently will soon publish: (1) a Controlled Group Spreadsheet to track eligibility for the lower rates and credits; and (2) an Assignment Certification that foreign producers must execute and their importers must file in order to claim the CBMA lower rates and credits.
In short, if CBP can keep to its timetable, importers can begin claiming the lower CBMA rates and credits by the end of the month.
Customs and Border Protection Interim Regulations for Refunds of Excise Taxes on Imported Beer, Wine and Spirits
US Customs and Border Protection (CBP) expects to publish tomorrow Interim Regulations authorizing the refund of beer, wine, and spirits excise taxes in connection with the 2017 tax reform act’s reduced rates and credits. The Interim Regulations specify:
- Claims must be filed with the National Revenue Center of the Alcohol and Tobacco Tax and Trade Bureau (TTB).
- Claims must be filed on TTB Form 5620.8.
- A separate claim is required for entries made at each US port or internal revenue region.
The interim regulations will be effective on the date of publication (expected to be August 16, 2018).
CBP also initiated a 60-day comment period that will provide interested parties with opportunities to raise questions or identify issues that are not addressed in the interim regulations.
Please let us know if you have any questions about this development.
TTB Issues Guidance on Transfers of Beer between Breweries of Different Ownership
Last week, the Alcohol and Tobacco Tax and Trade Bureau (TTB) published a TTB Procedure governing the transfer in bond of beer between breweries of different ownership. See TTB Procedure 2018-1 (July 17, 2018). In bond transfers between breweries of different ownership were authorized by the 2017 tax reform act and like many provisions of that act, the transfer provision is scheduled to sunset at the end of 2019.
Some highlights:
- The beer transfers can include both packaged and bulk beer.
- Transferred beer can be re-consigned while in transit or returned to the shipping brewery.
- Most recordkeeping and recording rules are the same as the current regulations governing transfers between breweries of the same ownership.
- Because the 2017 tax reform act’s lower tax rates apply to beer “produced” by the removing brewery, beer transferred in bulk does not benefit from the lower rates if the receiving brewer makes no changes or only de minimis changes to the transferred beer.
- For excise tax purposes, a beer is “produced” by a brewer if it is “brewed by fermentation or produced by the addition of water or other liquids during any state of production.” Blending alone does not qualify as “production.”
- Packaged beer that was transferred does not receive any lower rate of tax and will be taxed at the $18/barrel rate upon removal.
- Absent evidence of theft or diversion, in-transit losses of up to 2 percent are permitted without the need to file a report or a claim with TTB.
- Bulk containers used to transfer beer between breweries are subject to certain marking requirements.
CBP Issues Guidance on Alcohol Excise Tax Provisions
Yesterday, Customs & Border Protection (CBP) issued Guidance on the alcohol excise tax provisions contained in the Tax Cuts & Jobs Act (Tax Act). Key points
- Importers must continue to pay the full excise tax rate (not the rates reduced by the Tax Act’s lower rates or credits) upon importation.
- CBP and TTB are working on regulations to allow CBP to issue refunds retroactively.
- In anticipation of the new regulations, CBP advises importers to file protests on liquidated entries where a reduced rate or credit may apply.
- CBP will not process refund requests any earlier than January 15, 2019.
- The Guidance includes a detailed list of information an importer will need to provide in order to substantiate its eligibility to receive reduced rates and/or credits.
Please let us know if you have any questions about this development.
TTB to Allow Proprietors to Request Alternating Premise Variances for Storage of Tax- and Non-Tax-Determined Commodities
On May 16, 2018, the Alcohol and Tobacco Tax and Trade Bureau (TTB) issued Industry Circular 2018-3, allowing proprietors of distilled spirits plants (DSPs), bonded wine cellars (BWCs) and breweries to submit a request for a variance to the typical method for storing tax-determined and non-tax-determined products. Under TTB regulations, a proprietor designates areas of the premises as bonded and non-bonded. With few exceptions, tax-determined products can only be stored on non-bonded areas of the premises and non-tax-determined products can only be stored in bonded areas.
Under Industry Circular 2018-3, proprietors may request a variance to the bonded/non-bonded designations established in existing regulations. This variance would allow an “alternation” of a specific area or multiple areas between a bonded and non-bonded designation. An “alternation” allows two practices (e.g., brewing and winemaking) statutorily prohibited from occurring at the same premise to occur through the creation of a legal fiction. The premise “alternates” between one type of premise to accomplish one task and reverts to another type of premise to accomplish another task. (more…)
