The Craft Beverage Modernization Act (CBMA) allows substantially reduced tax rates or credits for both foreign and United States alcohol producers. Some of this was temporary and cumbersome during the past few years, but now that these tax changes appear to be long term, TTB has developed an online system to administer the tax cuts. Most foreign producers should register with TTB if their alcohol products will be imported into the US.
This tax savings opportunity is coming up very fast, and begins in 2023. TTB is allowing signups beginning in late 2022. In the past, TTB had a much different system to handle the rules around this tax reduction.
The excise tax savings can amount to hundreds of thousands of dollars per year per distillery. Upon a proper registration, the excise tax could drop from $13.50 per proof gallon to as low as $2.70. This is an 80% reduction and would take a typical bottle of vodka from $2.14 in federal excise tax to 43 cents. This seems well worth the extra time and expense, for all but the very smallest producers. The tax reductions apply to beer and wine also.
Effective January 1, 2023, foreign alcohol producers who wish to qualify for reduced rates or credits will need to register their plant using the myTTB website. A company authorized representative will use their personal access account to log in and complete the foreign plant registration. If the company representative doesn’t currently have an access account, they can use the myTTB page to create a new access account.
Once logged in, the company representative will provide the foreign producer’s name, country, plant address and mailing address. The representative must also provide a company contact person’s name and contact information and provide information regarding any person or entity that holds 10% or more voting interest in the foreign plant. The representative must also provide the plant’s FDA Food Facility Registration ID(s).
If the plant qualifies as a control group due to common ownership between their plant and another foreign or US alcohol producer, the reduced tax rates or credits will be based on the total production of all control group members, and the lower tax rates must be divided between the members of the control group.
The foreign plant representative will enter the amount of alcohol and the eligible tax rate they have assigned to each person or entity importing their alcohol into the US. They will also provide documentation of that assignment to the alcohol importer. A new assignment of the amount of alcohol and eligible tax rate must be made each year.
Our firm can help foreign and US producers, as well as US importers, to qualify for these tax opportunities properly. In addition, we can help with the FDA food facility registration parts of this program. We represent hundreds of alcohol beverage producers outside the US, and we also have long-time experience with FDA food facility registration. Daryl Polley has substantial experience with TTB tax issues, from his many decades at TTB, and various attorneys at the firm work closely with Daryl. If you need help in these areas, contact Daryl or Robert.