Starting next year, The TTB (Tobacco, Tax and Trade Bureau) will be on the lookout for a pair of items that will affect breweries.
- Change of ownership will need to be disclosed in a timely manner or penalties will accrue. Might not be a big deal for many but needs to be watched out for.
- Pay your taxes or they will hold up any expansion plans to other locations that you have in mind.
Both scenarios could come into play if you do not keep up to date with everything so get your paperwork ducks in a nice row.
If you were worried about the
looming Christmas deadline imagine what small brewers are feeling. December 31st is the end of the
CBMTRA (Craft Beverage Modernization and Tax Reform Act). That act of Congress (one of the few that the
do-nothing’s in DC have done) reduced the excise tax basically in ½ per
barrel. Instead of $7.00, the charge
went to $3.50 instead.
But it was a temporary relief bill
and if it is not re-authorized the cost of being in the beer business will go
back up. Thankfully, most states see the
benefits of this and it is hard to find many politicians that are against
bringing it back but with impeachment sucking the air out of the room, it could
easily be forgotten.
I think we all need
to send a little Thanksgiving reminder to our representatives to remind them of
how beer can grow without an Excise tax headwind.
I know that the words excise tax
either cause sleep or sleeplessness. The
first due to mind numbing legalese that need to be carefully read to be
understood and the latter because, well, no one likes paying taxes.
But stick with this post a
minute. One of the few good things in
the Trump “Don’t Tax the Rich but I Won’t Show My Tax Returns” plan was that
there was relief for small brewers as well as other alcohol producers and importers. The bad thing, the tax was temporary.
That temporary status is on the
road for a one-year extension with the Craft Beverage Modernization and Tax
Reform Act of 2019 which will be voted on by the full House of Representatives,
then if all goes well, to the Senate and then for the Cheeto to doodle on
before he realizes he has to sign it.
And if they do this enough times,
maybe they can make it permanent.
While the Republican Tax Cut has been dissected and rightfully dismembered for it’s generosity to those needy wealthy folk and corporations who will soon be charging us more for the interwebs, it did also have a nice bit of help for small brewers tucked inside. (Not that it helps the overall picture)
The Craft Beverage Modernization and Tax Reform Act will “recalibrate” according to the Brewers Association, the federal excise tax.
Here’s the gist:
“Under the bill, the federal excise tax on beer will be reduced to $3.50/barrel (from $7/barrel) on the first 60,000 barrels for domestic brewers producing less than 2 million barrels annually, and reduced to $16/barrel (from $18/barrel) on the first 6 million barrels for all other brewers and all beer importers. The bill maintains the current $18/barrel rate for barrelage over 6 million. In total, this represents more than $142 million in annual savings, which will allow America’s small brewers—who are manufacturers and entrepreneurs—to reinvest in their businesses, expand their operations, and hire more workers.
Additionally, CBMTRA increases collaboration between brewers by permitting transfer of beer between bonded facilities without tax liability.”
How breweries will react to these savings and how they use them will be interesting to watch. Will it go to infrastructure like tanks or more to employee benefits? And will it give an extra boost to those bigger breweries at the expense of the smaller? It will certainly impact the #independent beer world in 2018 but tax cuts don’t have the most predictable outcomes. And with most of these taxes sunset-ting to meet budgetary concerns, will they even have 1/2 the effect that is expected.
To get another deeper dive, check out the numbers HERE at the Beervana Blog.