CBMA Update Note – Administration of CBMA Tax Benefits for Importers to Transition to TTB

Oct 25, 2022

By: Louis Terminello, Esq. and Brad Berkman, Esq.

The Craft Beverage Modernization Act, or “CBMA,” created reduced tax rates for smaller producers of beer, wine, and distilled spirits produced. The CBMA also extended the tax benefit to importers of the same products. However, any casual conversation with an importer of wine, beer, and/or spirits quickly revealed that the process and procedures in place for claiming this tax benefit were perplexing. Like most importation issues concerning beverage alcohol, US Customs and Border Protection (“CPB”), was tasked with administering the CBMA. Unfortunately for importers, the CPB process was complex and outside the scope of their expertise. In fact, many customs brokers tasked with clearing alcohol into the US stream of commerce, among virtually all other imported commodities, were just as confused with the process as their importer clients.

Many claims were either never filed or incorrectly filed, resulting in lost importer revenue. Fortunately, (we are optimistic) recent changes have transferred responsibility for the administration of the CBMA to the Alcohol Tax and Trade Bureau (“TTB”) and is to take effect January 1, 2023. TTB has published a temporary rule implementing the new provisions and the procedures for importers to follow, along with their foreign producers, and leaving open the opportunity for comments on the provision by issuing a notice of proposed rulemaking.

TTB on its website indicates that importers will be required to file for drawback. Importers will be required to pay the full amount of excise tax due at entry and then file refund claims on a quarterly basis covering entries for that quarter. Moreover, and importers be cognizant of the following, foreign producers must register with TTB and assign their CMBA benefit to the importer of record using the TTB online system. Assignments on letterhead will not be accepted as they previously have been.

Many upper tier industry members, including importers, are far more familiar with TTB online systems and procedures than CBP procedures. Hopefully, this change of CBMA administration will prove to be an effective vehicle for importers exercising the rights granted to them under the CBMA and ultimately adding to their bottom line.

Feel free to contact us if you need assistance in navigating the claims process. We will advise as to any developments during the comment and rule-making process.

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CBMA Update Note – Administration of CBMA Tax Benefits for Importers to Transition to TTB

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