Customs and Border Protection issued guidance allowing reduced excise tax rates for alcoholic beverage imports and released documents needed to claim them.
Initial reactions of executives in the alcoholic beverage importing industry were favorable after U.S. Customs and Border Protection recently took major steps in implementing excise tax cuts for alcohol imports following the enactment of tax reform legislation at the end of 2017.
In guidance released on Oct. 16, CBP announced the availability of three documents — the Craft Beverage Modernization Act (CBMA) spreadsheet, controlled group spreadsheet and assignment certification — required for importers to claim reduced tax rates for beer, wine and distilled spirits imported during 2018 and 2019, as set forth in the CBMA provisions of the Tax Cuts and Jobs Act.
CBP will use the documents to establish several essential areas, including basic importer information, transfer of claimable tax credits from foreign producers to importers and decrementation of tax credit assignments.
The controlled group spreadsheet and assignment certification don’t have to be submitted with every entry but must be on file with CBP for every entry claiming the CBMA rate and will have to be resubmitted to the agency if there are any changes to information listed on the forms, according to the guidance.
CBMA forms must be filed for every entry, the guidance says.
On Sept. 1, CBP deployed in the Automated Commercial Environment (ACE) a line-level flag to identify imported alcohol for which the importer had received a CBMA assignment from the foreign producer. Prior to that, all filings had formally claimed pre-CBMA rates.
National Association of Beverage Importers (NABI) President Rob Tobiassen said in an interview with American Shipper that the Oct. 16 CBP message “provided a lot of guidance” and puts CBMA’s import provisions at about 80 percent to 90 percent implementation.
But he said he would have appreciated some example forms from CBP to answer a few lingering filing questions.
“I think there still are some questions,” said Tobiassen, who worked 34 years for the federal government, including more than nine years as the chief counsel for Treasury’s Alcohol and Tobacco Tax and Trade Bureau. “They are simple questions, but they still come up; like, you have to put the address of the foreign producer. … Does it have to be a street address? Can it be a post office box address, if they have a post office?”
To fully implement CBMA, CBP still must issue regulations raising the upper limit for alcohol content in still wines from 14 percent to 16 percent; further, CBP’s guidance so far applies only to 2018 CBMA filings, as the agency plans to issue guidance for 2019 CBMA filings next year, Tobiassen added.
CBP could be separating this year’s and next year’s filing procedures because it wants to see if it needs to make any tweaks to the 2018 framework before issuing regulations for 2019, he said.
In another interview with American Shipper, Lynne Omlie, general counsel for the Distilled Spirits Council, applauded CBP’s CBMA rollout and also noted the agency has said it will “expedite refunds with interest” for 2018 alcohol imports that cleared Customs at pre-CBMA rates.
On a yearly basis for each company, the CBMA cuts excise taxes from $18 to $16 per barrel for the first 6 million barrels imported, cuts excise taxes on distilled spirits from $13.50 to $2.70 per proof gallon for the first 100,000 proof gallons imported and cuts excise taxes for the first 750,000 gallons of wine imported, progressing up to a rate of approximately $2.43 per gallon.
Aug. 16 guidance released by CBP and Treasury authorized CBP to issue refunds on entries that are eligible for the reduced 2018 and 2019 excise tax rates, but were filed under the pre-CBMA rates.
Starting Jan. 31, CBP will liquidate claims for 2018 entries flagged at CBMA rates, according to the guidance.
For unliquidated entries, refunds can be requested through post-summary corrections (PSCs) that are marked with the CBMA flag and the CBMA rate and that are submitted to CBP with the three substantiating documents, according to the Oct. 16 guidance.
For 2018 entries that have liquidated at pre-CBMA rates, importers seeking the CBMA rate can file a protest with CBP and should identify “CBMA” in the protest issue dropdown, the guidance says.
“We commend CBP for their initiatives to have imports clear Customs at the appropriate rates pursuant to the Craft Beverage Modernization Act,” Omlie said in a statement. “CBP is a great partner in these endeavors and has been both responsive and proactive to our needs. We appreciate their efforts.”
The council recently held a “mega-conference call” with CBP on Oct. 19, with 50 people on the line, including council members, other industry members and customs brokers, during which CBP “responded to everybody’s questions,” Omlie said.
CBP is set to participate in another conference call with the council in the next few weeks to answer any remaining questions about CBMA implementation, she said.
So far, about 1,400 entries with the CBMA flag have been submitted to CBP, either at the time of entry summary or filed through PSCs, said Shari McCann, chief of the Trade Processes Branch of CBP Office of Trade’s Commercial Operations, Revenue and Entry Division, in an interview with American Shipper.
“Flags are coming in, [CBMA] rates are being declared … and the three required documents are starting to trickle in,” she said. “That’s slower, because that’s a learning curve, of course, with getting that information from the producer.”
Controlled groups — consisting of foreign producers and U.S. importers — each get one allocation of tax credits made available under the CBMA.
Generally, U.S. importers and foreign producers and their related entities are lumped into one control group and therefore receive one CBMA allocation.
But importers that import from several unaffiliated foreign producers are allowed to import in quantities greater than one allocation, because each unrelated foreign producer generates a unique CBMA allocation, McCann said.
But if there are any controlled group relationships between foreign producers and U.S. firms that produce alcohol domestically, those are considered one control group and limited to one allocation, Alex Hess, an attorney-adviser in CBP Office of Trade’s Office of Regulations and Rulings, told American Shipper.
Alcohol industry cheers CBP rollout of CBMA claims
