Distilled Spirits Council President & CEO Chris Swonger released the following statement on House Passage of the Craft Beverage Modernization & Tax Reform Act of 2019 (S.362/H.R.1175) in the Year-End Legislative Package Making Permanent the Federal Excise Tax Reduction for Craft Distillers
“Making the federal tax reduction permanent for craft distillers brings optimism and hope to hundreds of small distilleries across the country that are on the verge of collapse as a result of the pandemic. The distilled spirits industry is grateful to members of the House for recognizing the dire situation facing craft distillers in their districts, and for acting to secure much-needed tax relief for more than 2000 craft distillers nationwide. We urge the Senate to pass this legislation swiftly to accelerate the recovery of these small businesses and their surrounding communities.”
Background:
Introduced by Senators Ron Wyden (D-Ore.) and Roy Blunt (R-Mo.) and by Representatives Ron Kind (D-Wis.) and Mike Kelly (R-Pa.), the Craft Beverage Modernization and Tax Reform Act (CBMTRA) includes reforms enacted in 2017 that create a fair and equitable tax structure for brewers, winemakers, distillers and importers of all beverage alcohol. The tax reduction was renewed for one year in 2019 and was set to expire on Dec. 31, 2020. The bill has broad bipartisan backing with the support of 76 senators and 351 representatives.
Under CBMTRA, distillers pay a reduced excise tax rate of $2.70 per proof gallon for the first 100,000 proof gallons of distilled spirits (most craft distillers fall into this category); a rate of $13.34 per proof gallon for the next 22,130,000 proof gallons of distilled spirits; and a rate of $13.50 per proof gallon for production in excess of 22,230,000 proof gallons.
In addition to CBMTRA, the year-end legislative package also includes DISCUS-supported measures such as additional Paycheck Protection Program (PPP) funding and a second draw for eligible small businesses; expanded PPP funding for eligible restaurants and bars; deductibility for expenses paid with the proceeds of a forgiven PPP loan; and an expanded business meal tax deduction to assist restaurants severely impacted by the COVID-19 crisis.