The United States Tobacco and Trade Bureau (“TTB”) has finally issued guidance around the pieces of Craft Beverage Modernization and Tax Reform (the TTB is not as good at acronyms or naming as our legislators) contained in the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act made a number of changes to the way alcoholic beverages are regulated, primarily by (no surprise here) cutting taxes. However, there are some non-tax-cut-related improvements made, too; in general, these are small but helpful changes.
- For small brewers, federal excise taxes were reduced from $7/bbl on the first 60,000 bbl to $3.50/bbl – a cut of 50%
- Big brewers and importers got some benefits, too
- Brewers are now permitted to transfer beer in bond between each other –
- Notes: this is a big deal; now, when Brewers contract brew or bottle, the beer does not need to be tax-paid when it transfers between brewers; this is a really nice efficiency gain and the production brewer need not pay taxes on beer that isn’t really theirs.
- Notes: In Wisconsin, this doesn’t really impact “Recipe Brewers” – Wisconsin Recipe Brewers hold a federal “Wholesalers Permit” (aka “Basic Permit”) and are not considered “Brewers” for the purpose of the TTB; therefore, the transfer-in-bond would not be between two “Brewers”.
- Mead is now better defined and classified for tax purposes as a “Low Alcohol Still Wine” subject to tax at $1.07/wine gallon
- Low Alcohol Still Wines are now “Still Wines” (basically, non-carbonated wine, not including hard cider) up to 16% ABV
- Some tax credits for 2017 ($1/wine gallon on first 30,000; $.90/wine gallon on next 100,000; and $.535 on next 620,000)
- Notes: hard cider gets a different set of much smaller credits; see the Guidance for more in-depth explanation
- New tax rates – $2.70 per proof gallon on first 100,000 proof gallons; $13.34 per proof gallon on next 22.13 million proof gallons
- Spirits importers get some benefits, too.
- A similar transfer-in-bond authorization to Beer whether transferred in bulk or non-bulk containers