Congress just approved a much-anticipated, one-year extension of the federal alcohol excise tax credits originally granted in the Craft Beverage and Tax Reform Act (CBMTRA). These credits were set to expire next week on December 31, 2019, but with this extension alcohol manufacturers can rest a little easier knowing that excise taxes will not increase in 2020.
In addition to extending the tax credits on beer, wine, cider and distilled spirits for another year, the CBMTRA extension also includes a “technical correction” that allows wine tax credits to be transferred with wine in bond to a bonded wine warehouse or bonded winery. The receiving bonded warehouse or winery can then remove such wine on behalf of the producing winery, allowing the producing winery to take advantage of the tax credits, just as bonded wineries and bonded warehouses could do before the CBMTRA took effect in 2018.
The transfer of tax credits in this "technical correction" is retroactive to January, 1, 2018. Because wine tax credits will be transferrable with wine, the Alternate Procedure from TTB Industry Circular 2018-1a will no longer be in effect as of January 1, 2020, simplifying paperwork for the wineries who want to take advantage of these credits in the future.
The TTB announced in its December 23, 2019 special edition newsletter that it is working on “significant” updates to its CBMTRA FAQs, and will publish additional guidance for bonded wine cellars and wineries that would like to retroactively transfer wine tax credits for 2018 and 2019 removals from bond.