The Craft Beverage Modernization Act (CBMA) was originally enacted in 2017 as part of the Tax Reform Act, and was meant to provide some tax relief for domestic wineries, breweries, distillers, and importers of alcoholic beverages. The tax benefits as enacted in 2017 were set to expire after two years, meaning any tax credits were to expire in 2021. However, a further amendment to the Tax Reform Act of 2020 made the tax credits permanent. The tax credits were originally administered by the U.S. Customs and Border Protection (CBP), but with the law changes, the new federal administrator, as of January 1, 2023, is the Alcohol and Tobacco Tax and Trade Bureau (TTB) of the U.S. Department of the Treasury.
Specifically, credits were organized as follows according to the beverage and production level:
- Spirits: tax reduced to $2.70 per proof gallon for first 100,000 proof gallons produced or imported, and a rate of $13.34 per proof gallon for the next 22,130,000 proof gallons, per annum;
- Wine: tax organized into tiers, providing for a $1.00 credit per gallon 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, per annum; and
- Beer: breweries producing 2,000,000 barrels or less annually have tax rates reduced to $3.50 per barrel on first 60,000 barrels, and $16.00 per barrel thereafter; breweries producing over 2,000,000 barrels annually and beer importers have excise tax rate of $16.00 per barrel on first 6,000,000 barrels produced or imported.
Procedurally, any eligible tax filer would need to first pay the necessary taxes at the regular tax rate to CBP, then subsequently complete a claim for refund with the TTB.
Also, because of the changeover to the TTB’s administration of the tax credits, it requested all tax filers to update their contacts page by March 17, 2023.
For more information on the procedural changes to the CBMA, TTB filing, or I.P. law that affects the wine, spirts and beer industry, please contact Yonaxis I.P. Law Group.