Alcohol producers shared a collective sigh of relief in December when Congress made the Craft Beverage Modernization and Tax Reform Act (CBMA) permanent in its year-end funding legislation package after extensive lobbying and support from the industry.
Background
CBMA was originally passed in 2017 and enacted for the 2018 and 2019 calendar years in order to provide tax relief for brewers, winemakers, distillers, and importers of beverage alcohol. It was extended for one year in December of 2019 and was set to expire on December 31, 2020. Without passage, the tax rate on spirits producers would have reverted to the previous rates – an increase of 400%.
The act specifically allows for the following cuts to Federal Excise Taxes:
- Spirits – Distilled spirits will permanently be taxed at a reduced rate of $2.70 per proof gallon for the first 100,000 proof gallons produced domestically or imported annually, and a rate of $13.34 per proof gallon for the next 22,130,000 proof gallons.
- Wine – CBMA enacts a tiered tax credit system for wine produced or imported into the US. The system provides a $1 per gallon credit for the first 30,000 wine gallons, $0.90 credit for the next 100,000 wine gallons, and $0.535 credit for the next 620,000 wine gallons.
- Beer – Brewers producing 2 million barrels or less annually saw rates reduced to $3.50 per barrel on the first 60,000 barrels and $16 per barrel for the remainder. Brewers producing over 2 million barrels annually and beer importers also received a reduced excise tax rate of $16 per barrel, reduced from $18 per barrel, on the first 6 million barrels.
Producer Responsibilities & Procedures
Although the tax relief has been made permanent, producers and importers are still subject to the same annual documentation requirements mandated by the Alcohol and Tobacco Tax and Trade Bureau (TTB).
This includes: the CBMA Spreadsheet, Controlled Group Spreadsheet, and an Assignment Certification Document. More information on the documentation requirements for CBMA can be found at the U.S. Customs and Border Protection website.
CBP expects to further update the 2021 CBMA procedures and requirements in early 2021. To receive news and updates like this directly to your inbox, subscribe here.