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Refunds of excise tax on imported beer, wine, distilled spirits

U.S. excise tax on imported beer, wine, spirits

U.S. Customs and Border Protection (CBP) issued a release on implementing federal excise tax relief for imports of beer, wine, and distilled spirits, and that outlines what refund procedures will apply with respect to such imports.

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The CBP guidance is Cargo Systems Messaging Service (CSMS) #18-000403

Background

A title of the new tax law (Pub. L. No. 115-97, enacted December 22, 2018), known as  the Craft Beverage Modernization and Tax Reform Act of 2017 (CBMA), amended the Internal Revenue Code with respect to the tax treatment of certain alcoholic beverages. 

The new legislation made numerous temporary changes to the taxes imposed on beer, wine, and distilled spirits—including a reduced rate of excise tax on qualifying beer and distilled spirits, and a credit on qualifying wines—up to certain gallon thresholds for 2018-2019. 

The new tax law provides that the foreign producer is the person eligible for these benefits, but it can assign these rates or tax credits to an importer(s), provided that the quantity assigned to all importers by that producer could not exceed the quantities allowed by law. 

CBP in January 2018 stated that until procedures were established and guidance issued, importers of beer, wine, and distilled spirits seeking to qualify for the excise tax relief would need to continue to pay the full excise tax rates.  

CBP guidance on future refund requests

The CBP guidance provides that:

  • Importers must continue to pay the full excise tax rate at time of entry summary filing.  
  • CBP and the U.S. Treasury are considering amending current regulations (19 CFR 24.36) to allow CBP to issue refunds owed pursuant to the new tax law measures for imports of eligible beer, wine, and distilled spirits when appropriate. These amendments would apply to entries that have not been finally liquidated, and would be retroactive. 
  • In anticipation of the new regulations, CBP suggests that importers file protests on liquidated entries for which a CBMA reduced tax rate or credit may be due.  These refund requests will be processed no earlier than January 15, 2019. 

 

CBP also provided information required for an importer to substantiate its eligibility to receive the reduced tax rates or the tax credits from the foreign producer. Importers that are assigned reduced tax rates and/or tax credits from multiple foreign producers are directed to maintain this information for each foreign producer.

 

For more information, contact a tax professional with KPMG’s Excise Tax Practice group:

Deborah Gordon | +1 (202) 533 5965 | dkgordon@kpmg.com

Taylor Cortright | +1 (202) 533 6188 | tcortright@kpmg.com

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