Projected Annual Savings for Craft Distillers: Production Amount:
Pre-CBMA Tax Amount: Permanent FET Amount:
5,000 proof gallons
10,000 proof gallons
20,000 proof gallons
50,000 proof gallons
75,000 proof gallons
100,000 proof gallons
Amendments to CBMTRA: Some noteworthy amendments to the CBMTRA provisions include:
> Restrictions on the Transfer in Bond of Non-Bulk Distilled Spirits: The temporary CBMTRA provisions authorized the transfer in bond of distilled spirits for beverage purposes between distilled spirits plants irrespective of whether the distilled spirits are transferred in bulk or non-bulk containers. (Prior to 2018, transfers of non-bulk or bottled distilled spirits for beverage purposes were prohibited.) Under the 2020 Act, effective January 1, 2021, transfers of bottled spirits for beverage purposes are not autho-
rized except for transfers between bonded premises belonging to the same person or members of a controlled group and certain transfers for storage or bottling where the spirits are transferred back to the original transferor.
> Changes to the Single Taxpayer Provisions: The temporary CBMTRA provisions provided that two or more entities (whether or not under common control) that produce products “marketed under a similar brand, license, franchise, or other arrangement” shall be treated as a single taxpayer for purposes of the credits and reduced rates. The 2020 Act makes permanent these provisions
with amendments to apply the single taxpayer rule to DSPs who process distilled spirits. As revised, the single taxpayer provisions apply to two or more entities (whether or not under common control) that produce beer, wine, or distilled spirits, or process distilled spirits, under a license, franchise, or other arrangement.
> Changes to the Type of Processing Activities that Qualify for Reduced Tax Rates for Distilled Spirits: Beginning in 2022, only DSPs who perform a processing activity other than bottling are entitled to take CBMTRA reduced rates on distilled spirits that they process and remove in the calendar year.
Ashley L. Hanke, Esq. is an attorney at Malkin Law, P.A., a law firm serving the alcohol beverage industry. Ms. Hanke’s practice focuses on a wide variety of regulatory and compliance issues involving alcohol beverage industry members, including assistance with a broad range of Federal Excise Tax matters as they relate to the provisions of the Craft Beverage Modernization and Tax Reform Act. Nothing in this article is intended to be and should not be construed as specific legal advice.
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