Effective January 1, 2018, the Craft Beverage Modernization and Tax Reform Act of 2017 (CBMA)
(as contained in Pub. L. No. 115-97) amended the Internal Revenue Code with respect to the tax treatment of certain alcoholic beverages. The provisions of the CBMA are effective during calendar years 2018 and 2019. On October 16, 2018, U.S. Customs and Border Protection (CBP) issued procedures and requirements regarding the foreign producer assignment aspect of CBMA via CSMS message # 18-000609.
In CSMS message # 18-000609, CBP stated that separate procedures and requirements would be issued to address the CBMA’s temporary changes to the tax classification of certain wines, including wines containing more than 14%, but not more than 16%, alcohol by volume.
PROCEDURES AND REQUIREMENTS
This communication serves to provide procedures and requirements with regard to CBMA’s temporary changes to the tax rate on still wines having over 14%, but not more than 16%, alcohol by volume imported after December 31, 2017, and before January 1, 2020, pursuant to 26 U.S.C. 5041(b)(1), as well as certain “low alcohol by volume wine” and “mead” that are temporarily eligible for the same tax rate under 26 U.S.C. 5041(h). The applicable tax rate for these wines will be referred to in this guidance as the “$1.07 rate.”
CBP has updated the Harmonized Tariff Schedule record in the Automated Commercial Environment (ACE) to accommodate the $1.07 rate. Affected importers may now claim the $1.07 rate at the time of entry summary. Because this rate does not depend upon a foreign producer assignment, the procedures and requirements discussed in CSMS message # 18-000609 to complete a CBMA claim are not applicable. For this same reason, and as discussed in CSMS message # 18-000609, importers should not use the CBMA entry summary line level flag in ACE to identify entry lines to which the $1.07 rate applies.
(NOTE: In situations in which importers are claiming benefits pursuant to a foreign producer assignment, in addition to the $1.07 rate, the importers should use the ACE entry summary flag only to identify a CBMA foreign producer assignment claim as discussed in CSMS #18-000609.)
Similarly, CBP only processes and refunds CBMA claims pursuant to the assignment to an importer by a foreign producer/assigning entity of a reduced tax rate or tax rate incorporating applicable tax credits as permitted by the CBMA, in accordance with 19 CFR 24.36(d)(10). Therefore, pursuant to 19 CFR 24.36(e), importers should seek refunds from the Alcohol and Tobacco Tax and Trade Bureau (TTB) if the importer paid a higher tax rate, rather than the $1.07 rate, on still wines having over 14%, but not over 16%, alcohol by volume, on certain effervescent low alcohol by volume wine, or on certain effervescent mead. Upon request by the claimant, CBP will provide a notice to the importer of record pursuant to Section 24.36(e).
If you have any questions or require additional information, please contact CBMA@cbp.dhs.gov. CBP encourages trade members to continue to visit the CBMA page on CBP.gov at https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017.