Understanding the 2020 Extension to the USA Craft Beverage Modernization Act

The extension of the Craft Beverage Modernization Act for calendar year 2020 gives the craft beverage industry much to celebrate. Originally passed in 2017, this legislation was designed to reduce taxes on wines, spirits and beer imports for 2018-2019. With this extension passed by Congress in December, these taxes on craft brewers and wineries are reduced for another year.

 

Big Tax Savings for Wine Imports

Wine importers will see significant tax savings. The standard tax on 750,000 wine gallons would cost $802,500 – calculated at a rate of $1.07 per wine gallon. With the Craft Beverage Modernization Act, the rates on 750,000 eligible gallons would cost only $350,800 – a 43% savings. This would break down as follows:

  • First 30,000 wine gallons at $0.07 = $2,100
  • 30,001 to 130,000 wine gallons at $0.17 = $17,000
  • 130,001 to 750,000 wine gallons at $0.535 = $331,700

Hillebrand is Your Partner in Craft Beverage Modernization Act Filing

Hillebrand understands that the rules can be complex, but we have the experience and team in place that understands compliance with the Craft Beverage Modernization Act rules.  Hillebrand can provides our customers with:

  • 7501 entry summary filing support
  • Dedicated customs specialists for all accounts
  • Reporting on the allocation used per importer

 

Proof of Tax Allocation

Overseas suppliers and importers will need to provide “proof” and keep track of tax allocation for associated quantities in each tax tier throughout the yearIf your supplier sells product to multiple US parties, then you need to know if the supplier is providing allocation letters to other US importers within the same product category.

Getting Compliance Right

Be sure to use only the templates provided by Customs and Border Protection (CBP). These should be downloaded from the CBP website to ensure the dropdowns and formulas built into the templates are properly captured. Follow the instructions in each template. The CBP provides the necessary data and how it should be entered. Be sure that all paperwork is completed and attached to each claim, whether it’s a new or refund request. The Craft Beverage Modernization Act FAQ page can be a helpful source of information if you have questions.

 

Be Sure to Complete Required Paperwork

Suppliers and importers will need to complete three sets of paperwork. These include:

  1. Assignment Certification form – Issued and signed by supplier, which the importer uploads.
  2. Spreadsheet – Associates the entry filing, tax rate, total allocation taken to date, and supplier information.
  3. Controlled Group Spreadsheet – Defined by IRS code (basically a list of all the companies associated with the parent company).

As always, if you have any questions, our dedicated customs specialists are ready to help.

What Does the Future Look Like?

Keep in mind that the Craft Beverage Modernization Act was only extended for one year. With an election year upon us, it is unclear if there will be another extension beyond 2020. Hillebrand will continue to monitor upcoming legislation and advise our customers on any potential impact of changing regulations.

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