Anxious About Federal Excise Taxes…Again
The end of the federal Craft Beverage Modernization and Tax Reform Act (CBMTRA) on December 31, 2020 would mean big excise tax increases for small manufacturers.
What is the CBMTRA and Where is It Going?
The CBMTRA was passed along with the Tax Cuts and Jobs Act of 2017. The federal law made changes to the US Tax Code which resulted in lower federal excise taxes (FET) on beer, wine and distilled spirits. Small Domestic Brewers (those that make less than 2 million barrels per year) saw their FET rate go from $18 per barrel to $3.50 per barrel. FET rates on distilled spirits were reduced from $13.34 per proof gallon to $2.70 per proof gallon for the first 100,000 proof gallons produced by any distillery in a calendar year, regardless of size. The CBMTRA also reduced FET rates for mead and wine having less than 8.5% alcohol by volume (ABV) from $1.07 per wine gallon to $0.07 per wine gallon.
The CBMTRA was originally effective for only 2018 and 2019. One December 20, 2019, with the end just 11 days away, the CBMTRA was extended for one additional year. The CBMTRA is now scheduled to sunset on December 31, 2020.
The Push to Make CBMTRA Permanent
If CBMTRA is allowed to sunset at the end of 2020, FET rates will return to their 2016 levels. Beverage manufacturers would welcome another one-year extension, but that just prolongs the suspense. What they really want is permanence.
National manufacturers’ associations–including the Brewers Association, the Wine Institute, and the American Craft Spirits Association–are all pushing to make CBMTRA permanent. A new Craft Beverage Modernization and Tax Reform Act (S. 362/H.R. 1175), if passed, would make the FET rate cuts permanent. The act is co-sponsored by 346 U.S. Representatives and 74 Senators, reflecting broad support from Republicans and Democrats.
Do you have questions about excise taxes on alcoholic beverages? Contact us at email@example.com to schedule a consultation with a beverage attorney.
Because we’re attorneys: This blog post is provided on an “as is” and “as available” basis as of the date of publication. We disclaim any duty to update or correct any information contained in this blog post, including errors, even if we are notified about them. To the fullest extent permitted by law, we disclaim all representations or warranties of any kind, express or implied with respect to the information contained in this blog post, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title, non-infringement, accuracy, completeness, and timeliness. We will not be liable for damages of any kind arising from or in connection with your use of or reliance on this blog post, including, but not limited to, direct, indirect, incidental, consequential, and punitive damages. You agree to use this blog post at your own risk. Regarding your particular circumstances, we recommend that you consult your own legal counsel–hopefully BrewerLong.