The Consolidated Appropriations Act, 2021 includes a number of tax provisions related to the production and transfer of beer, wine and distilled spirits. Highlights of these provisions which affect producers and distributors include:

Beer Excise Taxes

The excise tax on beer remains at $16 per barrel on the first six million barrels brewed by the brewer or imported by the importer during a calendar year. Beer brewed or imported in excess of the six-million-barrel limit continues to be taxed at $18 per barrel. In the case of small brewers, such brewers are taxed at a rate of $3.50 per barrel on the first 60,000 barrels domestically produced during a calendar year, and $16 per barrel on any further barrels produced. The provision applies to beer removed after December 31, 2020.

Transfer of Beer Between Bonded Facilities

Beer may be removed from one brewery to another brewery without payment of tax if the transfer is between breweries belonging to the same brewer, there is a brewery controlling interest, and proprietors of the transferring and receiving premises are independent and the transferee accepts responsibility for the tax.

Wine Excise Taxes and Alcohol Content Level

For wine removed after December 31, 2020, the credit against the wine excise tax for small domestic producers is made available to all wine producers and importers regardless of the number of gallons of wine produced. For gallons of wine produced outside of the United States and imported into the United States that are removed after December 31, 2022, the credit against the wine excise tax no longer applies and a refund may be available in lieu of the tax credit. The alcohol-by-volume levels of the first two tiers of the excise tax on wine will keep the 16 percent tax rate, effective for wine removed after 2020.

Distilled Spirits Excise Taxes

A reduced tiered tax rate remains for distilled spirits removed after December 31, 2020. For proof gallons of distilled spirits produced outside of the United States and imported into the United States removed after December 31, 2022, the reduced tax rate no longer applies. A refund may be available in lieu of the reduced rate.

Transfer of Bulk Distilled Spirits

Distillers are allowed to transfer distilled spirits in bonds in containers other than bulk containers without payment of tax for spirits transferred after 2020. For bottling or storage of such distilled spirits, the transferor needs to retain the title during the entire period between such distillation, or processing, and removal.

Unified Accounting System for Beer

The IRS is required to amend regulations for federal excise taxes to allow a unified accounting system for beer on which taxes have already been paid, including in cases where such beer is intended to be consumed on the brewery premises.

If you would like more information on the new rules under the Consolidated Appropriations Act, 2021, please call our office. We are here to advise you.