Important Things to Know About Taxes on Imported Spirits Bottled in the U.S.

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Taxes are a vital part of importing spirits into the United States. In most cases, imported spirits need to pay taxes at US Customs. These taxes, known as federal excise taxes, are collected by the Alcohol and Tobacco Tax and Trade Bureau (TTB). Understanding how taxes work for imported spirits can help you better understand their costs and pricing. Let’s explore the key points about taxes on imported spirits bottled in the US.

Taxes on Imported Spirits

When it comes to imported spirits, the amount of tax owed depends on various factors. These factors include the type of alcohol, its proof (strength), and the country of origin. In addition to federal excise taxes, some states also impose their own taxes on imported spirits. These state taxes can add to the overall cost of the spirits.

Imported Spirits Bottled in the US

If imported spirits are bottled in the United States, they are considered domestically processed spirits. This means they are taxed as if they were produced in the US. As a result, imported spirits bottled in the US are only taxed once, but the tax amount depends on the state in which they are bottled. Some states have their own taxes on spirits. It’s important to note that bottling imported spirits in the US can involve additional costs, such as bottles, labels, packaging materials, and labor expenses. These costs can significantly increase the final price of the imported spirits even after they have been taxed.

Federal Excise Taxes on Imported Spirits Bottled in the US

Even if imported spirits are bottled in the US, they are still subject to federal excise taxes. The TTB states that imported spirits are subject to federal excise taxes regardless of whether they are bottled in the US or not. When imported spirits are bottled in the US, the bottler must pay the applicable federal excise tax and obtain a bottler’s bond to ensure tax payment. The bottler must also submit a notice of intent to bottle the imported spirits to the TTB, which needs approval before bottling can take place. The federal excise tax amount can vary based on factors like the type of alcohol, its proof, and the country of origin. It’s important to keep in mind that some states may impose additional taxes on spirits, increasing the total tax liability for imported spirits.

Paying Federal Excise Taxes at Customs

Imported spirits that are bottled in the US need to pay federal excise taxes upon entry into the country. This usually occurs at a US Customs location. The taxes are owed on the imported spirits in their original form before they are bottled in the US. Once the spirits have been imported, and the applicable federal excise taxes have been paid, the bottler can proceed with bottling. However, the bottler must still follow all regulations and requirements, including obtaining a bottler’s bond and submitting a notice of intent to the TTB.

Conclusion

Imported spirits bottled in the US are subject to both federal excise taxes at Customs and domestic spirit taxes. Federal excise taxes are collected by the TTB and are owed on the imported spirits upon entry into the US. The tax amount depends on various factors, including the type of alcohol, its proof, and the country of origin. After being bottled in the US, the spirits are considered domestic and are subject to any applicable state taxes, which are separate from federal excise taxes. State taxes vary depending on the state where the spirits are bottled. It’s important to be aware of all applicable taxes and consider these costs when pricing imported spirits. Understanding the tax process can help importers and consumers better understand the overall cost of imported spirits in the US.

Because we’re attorneys: Disclaimer. Posted June 4, 2023.