Federal Affairs

Craft Beverage Modernization and Tax Reform Act

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On Dec. 27, 2020, the president signed the year-end legislative package that included the Craft Beverage Modernization and Tax Reform Act (CBMTRA), making the existing federal excise tax (FET) rates for small and independent breweries permanent.

History of the Legislation:

The CBMTRA legislation was spearheaded in the Senate by Senators Ron Wyden (D-Ore.) and Roy Blunt (R-Mo.) and in the House by Representatives Ron Kind (D-Wis.) and Mike Kelly (R-Pa.). Together they re-introduced CBMTRA with the goal of making the recalibrated FET for breweries, wineries, and distilleries permanent. It was an extremely popular piece of legislation that had more than half the support of the 115th and 116th United States Congresses. Because of that broad support, a two-year provision of the CBMTRA language was included in the 2017 Tax Cut and Jobs Act, with the recalibrated rates going into effect on January 1, 2018. In the first two years, small and independent breweries used the money they saved to reinvest in their breweries and hire new employees, adding 25,000 new jobs to the brewing industry, in large part due to the recalibrated FET. Though the initial provision was only for two years, Congress extended the language through December 31, 2020. The language making the rates permanent was passed in the 2020 year-end legislative package.

How CBMTRA Impacts your Brewery

  • Now that the legislation is passed, the FET is:
    • $3.50/barrel (was $7/barrel prior to 2018) on the first 60,000 barrels for domestic brewers producing less than two million barrels annually
    • $16/barrel (was $18/barrel prior to 2018) on the first six million barrels for all other brewers, foreign and domestic
  • Additionally:
    • The current $18/barrel rate for barrelage over six million remains unchanged.
    • Importers seeking to claim the lower rate ($16/barrel) on a particular import must demonstrate that the brewery that supplied the importer is eligible for the lower rate.
    • “Controlled group” rules apply to the calculation of the barrel thresholds above. To briefly summarize these complex rules, the production of brewers affiliated with one another through common ownership interests in excess of 50% are aggregated for purposes of calculating barrel thresholds. So, for example, a brewery producing 50,000 barrels per year that is majority owned by a brewery producing more than two million barrels per year does not get the benefit of the $3.50/barrel rate.
  • Breweries can transfer beer between bonded brewing facilities, regardless of their ownership (this was limited to breweries of the same ownership prior to 2018). All breweries may transfer beer in bond between domestic breweries without tax liability, something that benefits small unaffiliated brewers and gives them the flexibility to collaborate on new beers without facing a tax liability.
    • Who is allowed to transfer between bonded facilities?
      • Independently owned breweries where the transferor has divested itself of all interest in the beer so transferred, and the transferee has accepted responsibility for payment of the tax
      • Breweries that are owned by the same person/entity
      • A brewery that owns a controlling interest in another brewery
  • The new legislation also makes slight changes to the wording of the “single taxpayer rule,” which was first enacted as part of CBMTRA at the end of 2017. The single taxpayer rule effectively seeks to count as the production of a single taxpayer (for purposes of determining rate eligibility and thresholds) the combined production two different breweries producing a brand under a single “license” – presumably meaning a trademark license. While the new language has not yet been subject to any clarifying interpretation by the Alcohol and Tobacco Tax and Trade Bureau (TTB) or the courts, we believe TTB will continue to count barrels of beer produced by one brewer for another under a license (such as a contract brewing arrangement) as production by both brewers.
  • The legislation also makes permanent a change that permits brewers to utilize a single unified records system to document its compliance with federal excise tax laws.

Economic Benefit to Breweries

The following chart summarizes the potential benefit for the impacted barrelage tiers.

Brewery Size:
Domestic < 6 Million Barrels
Brewery Size:
Domestic > 6 Million Barrels & Imports
Total
32,900,074
Total Barrels
170,448,945
Total Barrels
203,349,019
Total Barrels
$423,723,077
Total Industry Current Tax
$3,068,081,010
Total Industry Current Tax
$3,491,804,087
Total Industry Current Tax
$334,948,622
Total Industry CBMTRA Tax
$3,002,275,122
Total Industry CBMTRA Tax
$3,337,223,744
Total Industry CBMTRA Tax
$88,774,455
Savings
$65,805,888
Savings
$154,580,343
Savings

Next Steps

  • Legislative: Updating the collections process for imported beer and spirits. The year-end package:
    • Included language that would change the process by which imported beer and spirits are able to access the recalibrated excise tax rates
    • Provides that beginning on Jan. 1, 2023, importers will pay the full FET rate upon importing the product and then apply for a refund, which shall be paid no less than every 90 days, with interest if payments are not made in a timely manner
    • Directs the Department of Treasury to promulgate a rulemaking and present a plan to Congress within 180 days of the bill’s passage for how the Department of Treasury will administer CBMTRA-related import refunds
    • Requires foreign producers to provide information about the assignment of their rates, including “information about the controlled group structure of such foreign producer”
  • Breweries: We want to ensure that we keep providing congress with information about how breweries are using the recalibrated excise tax rates to reinvest in their businesses and hire new employees.
    • Keep track and share information with the Brewers Association. Make note of the changes that you make in your brewery, employees that you hire, new equipment that you purchase, etc. Participate in surveys like the Beer Industry Production Survey (BIPS) and let us know how many barrels you are producing, what type of entity your brewery is registered as (LLC, LLP, pass-through, etc.), and other things that can help us when we are advocating on Capitol Hill.
    • Participate in Hill climbs with your state guild and the Brewers Association.

Federal Affairs Updates

Brewers Association Director of Federal Affairs Katie Marisic provides federal affairs updates about what is going on in Washington, D.C. and the issues that the Brewers Association is currently working on. 

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Government Affairs news and announcements trade negotiations, tariffs and federal government investigations that could impact breweries and their supply chain partners.

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Congressional Caucuses

The House and Senate Small Brewers Caucuses provide a forum for members of Congress and their staffs to discuss the issues important to small brewers while exploring what lawmakers can do to strengthen the growth and role of these small businesses in local economies across the country.

House Small Brewers Caucus Members

200 Members in 41 States, the District of Columbia*, and Puerto Rico* represented as of February 25, 2021.

If your state is not represented in the House Small Brewers Caucus, learn how to recruit your representative to join.

Rollover the map to view House Small Brewers Caucus members or download a PDF of the full list.


About the House Small Brewers Caucus

The House Small Brewers Caucus in the United States House of Representatives provides the small brewing community in America an extremely important forum in Washington, D.C.

The Caucus was formed in 2007 by interested members of Congress to gain a better understanding of all aspects of small brewing, from business and regulatory issues to the brewing process and history of the small brewing community. The purpose of the House Small Brewers Caucus is to provide elected officials and their staffs an interactive opportunity to learn about the dynamics of running a small business as a brewery and the quality, process, and value of craft beers and small brewing activities.

While small breweries share many of the same priorities and concerns that other small businesses have, brewing is a highly regulated business and has unique issues that most Americans are not aware of. The Small Brewers Caucus intends to provide information about the science and art of beer and brewing as well as relevant business, regulatory, and societal issues.

House Small Brewers Caucus Founding Co-Chairs

Peter DeFazio

(D-Oregon)

Co-Chair

Mike Kelly

(R-Pennsylvania)

Co-Chair

Richard Neal

(D-Massachusetts)

Vice Chair

Patrick McHenry

(R-North Carolina)

Vice Chair


Senate Bipartisan Small Brewers Caucus Members

33 members in 24 states represented as of January 6, 2021.

If your state or district is not represented in the Senate Bipartisan Small Brewers Caucus, learn how to recruit your representative to join.

Rollover the map to view Senate Bipartisan Small Brewers Caucus members or download a PDF of the list.


About the Senate Bipartisan Small Brewers Caucus

The Senate Bipartisan Small Brewers Caucus was founded by former Senator Max Baucus (D-Mont.) in June, 2011 and is now chaired by Senators Ron Wyden (D-Ore.) and Lisa Murkowski (R-Alaska).

Mirroring the House Small Brewers Caucus (formed in 2007), the Senate Bipartisan Small Brewers Caucus provides a forum for members of the Senate and their staffs to discuss the issues important to small brewers while exploring what lawmakers can do to strengthen the growth and role of these small businesses in local economies across the country.

The caucus also provides opportunities for Senators and staff to learn about the science and art of brewing beer, and the unique cultural and economic contributions made by small brewers to their communities.

Senate Bipartisan Small Brewers Caucus Founding Representatives

Ron Wyden

(D-Oregon)

Co-Chair

Lisa Murkowski

(R-Alaska)

Co-Chair

Connect with Elected Officials

Building a relationship with your elected officials is one of the most important “government relations” functions you can perform as a member of the craft brewing community.

The Brewers Association Board of Directors and staff have made the development of a strong and meaningful government affairs relationship a priority.

Together we’ve achieved some notable results:

  • Twice turning back potential new taxes in the form of TTB user fees
  • Successfully streamlining the excise tax payment schedule for many small brewers
  • Petitioning the TTB to expand the recognition of traditional ingredients and processes
  • Passage of a Congressional Resolution recognizing the valuable contributions of craft brewers
  • Introducing legislation to re-calibrate the federal excise tax rate for small brewers that had the support of more than half the Representatives and Senators in Congress

Arrange a Congressional Visits to your Brewery

It’s Easier than You Think!

The invitation can be made with a quick phone call or email. The visit itself will only take an hour of your time, but will keep paying returns on the local and national levels. And, it’s easy.

Identify Your Elected Officials:

You will typically find specific office contact information in the contact section or footer of an elected officials website. Identify the district office contact information for arranging the visit.

Phone the office to make your request, asking to speak with the scheduler. If there is more than one district office, determine which is the nearest to your brewery and call that one.

If you have any questions or if you need help with contact information for state/district directors or schedulers, please email one of us for assistance. And finally, stay in touch and let us know how your visit goes.

Get in Touch with Government Affairs Leaders

Email Us: marisic@brewersassociation.org

Bob Pease

Chief Executive Officer, Brewers Association

Katie Marisic

Federal Affairs Manager, Brewers Association