Troubling Implications of the New Wine Tax Law

Mar 12, 2018

(Csa-compliance) - Late last Friday afternoon (March 2) TTB released further guidance on the recently enacted Craft Beverage Modernization and Tax Reform Act. The new guidance finally answered some large and pressing questions about how the law will be implemented, and revealed some very troubling consequences. While the Act created new tax credits that were meant to benefit all wineries large and small, it’s now clear that it falls short of its promise due to its poor drafting and hasty implementation.

Not all of your wine is eligible

In three FAQs added last week to TTB's website the agency confirmed that, because of the way the law was written, only wine produced by the taxpayer who removes the wine is eligible for the new credits. This means that any wine received in bond is not eligible for the new credits -- unless the removing winery has performed an operation on it that increases its volume, such as sweetening, the addition of wine spirits, amelioration (where legal), or the production of formula wines which was "undertaken in the ordinary course of production and not solely for the purpose of qualifying for the credit" (emphasis added).

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