Federal Tax Bond & Reporting Relief Coming in 2017

6355404323_cf97f9c58e_zBeginning January 1, 2017, the federal bond and tax reporting requirements for some breweries, wineries, and distilleries will get a little easier.

Exemption from Federal Tax Bond

Beginning January 1, 2017, breweries, wineries, and distilleries that in 2016 owed less than $50,000 in federal excise taxes, and expect the same in 2017, are not required to carry a federal tax bond. The following chart provides some of the production limits for the bond exemption:

Product

Annual Production

Beer

7,142.85 barrels (221,428.57 gallons)

Wine (14% ABV or less)

46,729 gallons (subject to tax credit for small producers)

Spirits

3,703.7 proof gallons

Manufacturers that first apply for federal licensing after January 1, 2017 can indicate on their initial applications whether they expect to have less than $50,000 in total excise taxes for the year, in which case they will not be required to post a bond with their applications.

Manufacturers that were licensed prior to January 1, 2017, or whose applications were pending but not yet approved before January 1, 2017, have the opportunity to amend file amendments to indicate that they are exempt from the bond requirement. The amendment cannot be filed until after all tax reporting for 2016 and prior years has been completed and all excise taxes owed have been paid. Unless and until an amendment is filed, the manufacturer is still required to carry its federal bond.

Annual Tax Reporting

Also beginning January 1, 2017, small breweries, wineries, and distilleries that in 2016 owed less than $1,000 in federal excise taxes, and expect the same in 2017, are permitted to file one annual excise tax return and tax payment for the year, rather than reporting and paying quarterly. The following chart provides some of the production limits for annual reporting:

Product

Annual Production

Beer

142.85 barrels (4,428.57 gallons)

Wine (14% ABV or less)

5,882.35 gallons (includes tax credit for small producers)

Spirits

74.07 proof gallons

These changes to the federal alcoholic beverage excise tax are part of the Protecting Americans from Tax Hikes Act of 2015 (the “PATH Act”). For more information, check out TTB Public Guidance 2016-4.

Not that these changes do not affect any of the excise taxes or reporting owed to your state regulatory agency.