The CBMA Changes You Need to Know for 2023

The CBMA Changes You Need to Know for 2023

Adriana McKinnon 0:10

My name is Adriana McKinnon with Park Street University, and today we will be discussing the upcoming changes to the Craft Beverage Modernization and Tax Reform Act (CBMA). CBMA provides tax relief for brewers, winemakers, distillers, and importers of beverage alcohol. If you’d like to learn about how CBMA can help save on importing costs, the link to our previous video is available in the description. Today, we will be discussing the recent changes made to the CBMA filing process. As of January 1st, 2023, CBMA administration will transfer from U.S. Customs and Border Protection (CBP) to the Alcohol and Tobacco Tax and Trade Bureau (TTB). Moving forward, the TTB will administer all new CBMA import claims.

Adriana McKinnon 1:01

How will this change the process for your business? First of all, the TTB will now require payment of federal excise taxes at the standard rates used before CBMA at the time of entry on beer, wine, and spirits. This means that receiving the CBMA reduced tax rate at the time of importation will no longer be an option. Refunds for the difference between the standard rate and CBMA rate will be issued upon submission of quarterly requests via the TTB Importer Portal. Importers will use the TTB Importers Portal, scheduled to launch in Q1 of 2023, to submit CBMA refund claims based on the foreign producer’s assigned CBMA tax benefits.

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All foreign producers selling in the U.S. must register with the TTB, receive a Foreign Producer ID, and assign the CBMA tax benefits to importers—either independently or via a third party. For Park Street suppliers, there will be an open registration program for all producers. The new CBMA system will have two management portals: the Producer Portal, which is now live, and the Importers Portal, which is scheduled to go live during the first quarter of 2023.

Adriana McKinnon 2:29

In order to ensure your eligibility for CBMA under this updated process, you will need to take new deadlines into consideration. The current CBMA structure allows up to 1.5 years to file for refunds, but this will change in the upcoming year. Starting in 2023, foreign producers will be able to assign allocations starting on October 1st of the year prior, and must have all allocations assigned by December 31st of the calendar year for which the benefits would apply. For example, a foreign producer can begin assigning allocations for 2024 on October 1st, 2023. After December 31st, 2024, the producer will not be allowed to assign tax benefits by any method for imports in 2024. Failure to abide by the deadline will disqualify the importer from CBMA benefits.

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It is also strongly recommended that producers are registered and that allotments are assigned before the arrival of any shipments to ensure eligibility for CBMA benefits. As long as a registered foreign producer has designated an allotment, incoming imports will be flagged for CBMA benefits at the time of importation. With this flag, the importation tax will be paid at the standard tax rate, but will become qualified for quarterly refunds via the Importers Portal.

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It is also important to understand the limits for control groups. The Internal Revenue Code provides that quantity limitations for CBMA tax benefits are applied to the entire control group and shall be apportioned among the control group members. In other words, their combined CBMA tax benefit assignments to U.S. importers cannot exceed the quantities allowed by law. Of course, the TTB has also announced that if a foreign producer provides erroneous information, eligibility to assign tax benefits will be revoked for a period not to exceed three calendar years following the year of revocation. Additionally, if a foreign producer has previously had its eligibility revoked, subsequent revocation may instead be permanent.

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As of yet, the TTB has not provided any guidance on expected refund processing times, but some delays are expected until the new program reaches a steady state. The standard processing time for refunds should be under 60 days; otherwise, the TTB will pay eligible claims including interest. For any further information on how these changes will affect the registration process for CBMA benefits, Park Street clients can reach out to cbmtr@parkstreet.com. To learn more about Park Street services, please contact info@parkstreet.com. Thank you!