Lower Tax Rate Now Available for Wines Over 14% ABV

US Customs/CBP has published the guidelines for the process to apply the lower rate assigned in the CBMA legislation for wines between 14% and 16% ABV.  The CSMS message from Customs is published in its entirety below.  We have been waiting to publish this message hoping we would have clarity on the process to claim the lower rate for 2018 imports but due to the government shutdown, we are not able to get answers from the TTB on processing claims.  The two key takeaways from the CSMS are:

1. All importers can now take the lower rate (referred to in the message as the $1.07 rate).  There are no limitations or requirements to pay the lower rate and most customs brokers do now have the lower rate programmed into their systems.
2. Claims for retroactive refunds apparently will be filed directly with the TTB.  We are waiting for TTB answers to clarify the process and will advise as soon as we have details. 

Should you have any questions, please contact us!  

CSMS #18-000708

Title: Procedures and Requirements: Implementation of the 14-16% Still Wine Tax Pursuant to CBM

Date: 12/3/2018 8:36:09 AM

To: Automated Broker Interface, ACE Outreach Events, ACE Portal Accounts, ACE Reports, New ACE Programming, Partner Government Agencies

Related: 18-000511, 18-000587, 18-000609

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.