Federal Excise Tax Overview

Excise Tax Bills

S. 1562 H.R. 2903

Craft Beverage Modernization and Tax Reform Act of 2015

The Craft Beverage Modernization and Tax Reform Act (S. 1562) was introduced in the Senate by Sen. Ron Wyden (D-OR), the Ranking Democrat on the Senate Finance Committee on June 11, 2015. Sen. Blunt (R-MO) is the lead Republican on this bill, and along with Sen. Baldwin (D-WI), is the lead on the “Fair Beer Act.”  Sen. Wyden is a strong supporter of the Small BREW Act.

The companion bill in the House (H.R. 2903) was introduced on July 8, by Reps. Erik Paulsen (R-MN) and Ron Kind (D-WI).  Paulsen is the lead sponsor of the Small BREW Act in the House, and Kind is the lead democratic sponsor of the Fair Beer Act. The full list of sponsors can be found on BrewersAssociation.org.

Pairing strong supporters of the Small BREW Act and Fair Beer Act was deliberate, so as to demonstrate the consensus nature of the Craft Beverage Modernization and Tax Reform Act.

This legislation not only is supported by the broad spectrum of the beer industry (the Brewers Association, Beer Institute support and National Beer Wholesalers Association), but also vintners (Wine America and the Wine Institute) and distillers (American Craft Distillers Association and DISCUS) as well as related industries like the National Barley Growers Association and the Hop Growers of America. The intent of the bill is to update and modernize the excise tax and regulatory requirements for craft brewers as well as vintners and distillers, and thereby help to ensure the continued growth of America’s craft beverage industries.  This legislation is tailored to promote job creation in each industry. Among other things, the bill would:

Reduce excise tax and regulatory burdens for brewers

  • Recalibrate excise taxes for brewers to provide more cash flow to allow them to reinvest in their businesses. (Sec. 201)
  • Under the bill, the federal excise tax would be reduced to $3.50/barrel on the first 60,000 barrels for domestic brewers producing less than 2 million barrels annually, and reduced to $16/barrel on the first 6 million barrels for all other brewers and all beer importers.  The bill would maintain the current $18/barrel rate for barrelage over 6 million.
  • Simplify beer formulation and label approvals by exempting common beer ingredients (e.g., wholesome fruits, vegetables and spices) from lengthy TTB approval processes. (Sec. 202)
  • Increase collaboration between brewers by removing restrictions on tax-free transfers of beer, repealing unnecessary inventory restrictions and allowing expansions of breweries for packaging and storage facilities.  (Sec. 204)

Reduce compliance and tax burdens for all producers

  • Exempt approximately 90 percent of producers from bi-weekly filing and burdensome bonding requirements. (Sec. 101) This portion of the bill was passed in the 2015 Tax Extenders Package, it will be implemented in 2017.
  • Exempt beverage producers from complex capitalization rules for aged products and level the playing field between U.S. businesses and their international competitors. (Sec. 102)

Improve excise tax enforcement and administration

  • Expand TTB program integrity funding to crack down on tax cheats, while providing additional funding for TTB regulatory functions and label approvals. (Sec. 601)
  • Expand current TTB information sharing to all excise taxes administered by U.S. Customs and Border Protection (CBP) of the Department of Homeland Security.  (Sec. 602)