ALCOHOL LAW ADVISOR
ALCOHOL LAW ADVISOR
Regulatory and Distribution Law Updates for the Alcohol Industry
ALCOHOL LAW ADVISOR
Regulatory and Distribution Law Updates for the Alcohol Industry
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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.

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Five Issues That Impact Craft Brewers

In an article published by The New Brewer, Marc Sorini discusses five issues most likely to have a meaningful impact on craft brewers in the coming years, including: The Craft Beverage Modernization and Tax Reform Act’s (CBMTRA) new tiered excise tax rate structure, its extending benefits to foreign producers, and its authorization for brewers to transfer beer in bond between breweries of different ownership. The Sixth Circuit’s published opinion in Byrd v. Tennessee Wine and Spirits Retailers Association, affirming a decision finding that the “durational-residency” requirements imposed by Tennessee law for alcohol beverage retail licensees are unconstitutional under the “dormant” Commerce Clause. The TTB’s creation of a new unit within its Trade Investigations Division to focus on trade practice enforcement. The opinion in Mission Beverage Co. v. Pabst Brewing Co. from the California Court of Appeals, which found that “an existing distributor’s receipt of...

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TTB Publishes Additional Tax Act Guidance on 5010 Wine and Flavor Credits

Today, TTB published additional Tax Act guidance on its website. Three new clarifications address the interaction of the new Tax Act rates/credits with the wine and flavor credits available under 26 U.S.C. § 5010. The clarifications are: TTB re-confirms that the 5010 credit applies to spirits subject to the Tax Act’s reduced rates, but the 5010 credit cannot reduce the effective rate of tax on any spirit to below zero. TTB indicates that the effective rate of tax on products receiving 5010 flavor credit will vary, depending on the applicable Tax Act rate applied to the finished product. The wine base rates, before any reduction through Tax Act credit allowances, are to be used when calculating the wine content credit applied to a spirit under Section 5010.

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Additional Rum Cover Over for Puerto Rico and the US Virgin Islands Approved in 2018 Budget Legislation

Early this morning, both houses of Congress approved the "Bipartisan Budget Act of 2018," complex legislation that includes important modifications to an arcane law known as the "rum cover over," which is an important revenue source for the Commonwealth of Puerto Rico and the US Virgin Islands (USVI). The temporary excise tax relief provided to distillers in the 2017 federal tax reform law will not diminish the amount of federal excise tax revenue covered over to the treasuries of Puerto Rico and the USVI. The 2017 tax reform law included a two year reduction in the federal distilled spirits excise tax rate from $13.50 per proof gallon to $2.70 per proof gallon on the first 100,000 proof gallons of distilled spirits, and $13.34 per proof gallon on the next 22,130,000 proof gallons produced by each distillery or each controlled group of distilleries. The 2018 Budget Act treats all rum subject to the rum cover over as if it is subject to the full $13.50 per...

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Excise Tax Relief for Breweries, Wineries and Distilleries

This post does not constitute tax advice. It summarizes changes in alcohol beverage excise tax laws to assist industry members in planning to implement the changes. Excise tax calculations and liability must be determined for each taxpayer based on numerous variables. The new tax law formerly referred to as the Tax Cuts and Jobs Act of 2017, provides a temporary reduction in alcohol beverage excise taxes for US brewers, winemakers, distillers and beverage importers. Temporary tax relief is available for beer, wine and spirits removed from a US manufacturing facility or released from Custom’s custody after January 1, 2018, and prior to December 31, 2019. Several provisions of the new law will require the Alcohol and Tobacco Tax and Trade Bureau (TTB) to quickly promulgate new regulations. The new law also modifies existing sections of federal excise tax laws so that commonly owned manufacturers and importers get "one bite at the apple" for each beverage...

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