Distilled Spirits Council President & CEO Chris Swonger released the following statement after President Donald Trump signed into law the stimulus package including the Craft Beverage Modernization and Tax Reform Act of 2019 (S.362/H.R.1175) Making Permanent the Federal Excise Tax Reduction for Distillers
“We are thankful that President Donald J. Trump and Congress delivered this much-needed economic relief to craft distilleries. While distilleries have faced extraordinary challenges this year, this legislation making their reduced tax rates permanent will give these distillers a renewed sense of certainty and hopefulness for the future.”
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 had broad bipartisan backing with 76 cosponsors in the Senate and 351 in the House.
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.