Bill Includes Critical Federal Tax Waiver for Distillers’ Production of Hand Sanitizer; DISCUS Urges FDA to Update Guidance to Ensure Distillers Don’t Face Tax Hit 

WASHINGTON — The Distilled Spirits Council of the United States (DISCUS) today welcomed the passage of the third COVID-19 relief package by the U.S. Senate. This relief package includes an important federal excise tax waiver for hand sanitizer produced by distillers, and approximately $2 trillion to respond to COVID-19, including important economic assistance for American businesses and workers that have been negatively impacted by COVID-19.

Important Federal Excise Tax Waiver For Production of Hand Sanitizer Included in Relief Package; DISCUS Still Seeking FDA Fix To Ease Restrictions on Distillers

As part of the economic relief package, Congress eased tax regulations so that distillers producing desperately needed hand sanitizer to address the national short fall would not have to pay federal excise taxes on the alcohol used.

“We greatly appreciate Congress’ efforts to make this important change regarding the federal excise tax and hand sanitizer production.  Hundreds of U.S. distillers are stepping up to produce hand sanitizer and they should not be hit with a huge tax bill for producing this much-needed item, especially at a time when so many of them are struggling,” said Chris Swonger, President and CEO of the Distilled Spirits Council of the United States, noting that for weeks DISCUS has been working with Congress and the Tax and Trade Bureau to try to resolve the issue. “We now need FDA to recognize the same and update critical guidance for distillers to ensure the tax provision can be implemented.”

DISCUS is urging FDA to update its Guidance to permit distillers to use undenatured alcohol in its hand sanitizer formula as directed by the WHO GuidanceMost beverage alcohol companies exclusively make products with undenatured alcohol and may not be able to access the required denaturing materials. Denatured spirits are those that are treated with bittering agents to make them unsuitable for human beverage consumption.  “We stand ready to work with FDA officials to resolve any concerns regarding the use of undenatured alcohol in hand sanitizer,” said Swonger.

The legislative package also  includes important assistance for small businesses in the hospitality industry including:

  • $349 billion for Small Business Administration (SBA) loans to businesses
  • $10 billion for SBA emergency grants of up to $10,000 for immediate relief for small business operating costs
  • $17 billion for SBA loans to cover 6 months of payments for small businesses with existing SBA loans
  • A retention tax credit for employers to encourage businesses to keep workers on payroll during the crisis
  • 13 weeks of additional unemployment insurance for employees
  • Up to $1,200 payments to Americans who make $75,000 or less (or $2,400 for a joint return for households making $150,000 or less) plus $500 per child with benefit tapering off for higher incomes

“We applaud the Senate and the Trump Administration for moving swiftly to reach a bipartisan deal to support American businesses and workers during this difficult time. While this bill represents a critical lifeline for distillers, they are in desperate need of additional economic relief,” said Swonger.

“We implore Congress not to forget struggling distillers who contribute to our nation’s vibrant hospitality, restaurant and tourism industries.  The spirits industry employs 1.6 million people nationwide and generates $180 billion in economic activity in the United States.  The closures of craft distilleries across the nation would be an incredible loss to the American economy,” Swonger added.

Ted Huber, co-owner of Starlight Distillery in Indiana and president of the DISCUS Craft Advisory Board, added, “Distilleries make important economic contributions to their home states by increasing tourism, supporting agriculture, and boosting local economies. This is an important first step to getting craft distillers back on their feet. Many have had to close their tasting rooms and suspend tours, forcing many to shut down production and lay off their workers. Craft distilleries are doing their part to ensure the health and safety of their communities, and many are even using their skills and knowledge to create hand sanitizer for first responders, healthcare workers, and others. We need to ensure distilleries survive during this crisis.”

Last week, DISCUS and other spirits association leaders sent a letter to Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer, outlining measures that could aid U.S. distillers.