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58 WINES&VINES July 2018 WINE INDUSTRY NEWS WINE EAST W ashington, D.C.–The Tax Cut and Jobs Act signed into law on Dec. 22, 2017, provided excise tax relief for wineries, regardless of size. It was a compre- hensive, complicated law that was written quickly and passed without detailed review, but it did include a version of the Craft Bever- age Modernization and Tax Reform Act. The new law reduced federal excise taxes on wine through a system of tax credits and other means, and it was thought that all wineries would see lower excise tax rates. Although the federal excise tax on table wine would remain steady at $1.07 per gallon, a new tax credit of $1 would be allowed on the first 30,000 gallons of wine produced, which lowered the effective tax rate to 7 cents per gallon. The amount of the new tax credits changed as the size of the winery increased, with 750,000 gallons being the ceiling for the tax credit. Glitches in the Tax Cuts and Jobs Act soon became apparent. The wine industry knew a two-year "sunset" provision had been included in the legislation that would eliminate the tax reductions as of Dec. 31, 2019. What was not anticipated was that additional, incorrect lan- guage had been included that could nullify the benefits for many wineries if they used custom crush facilities or stored wine off-site at bonded wine cellars. When the Alcohol and Tobacco Tax and Trade Bureau (TTB) issued guidelines in the Industry Circular 2018 - 1 on March 2, it was clear that TTB had interpreted those changes in language to mean that the tax cuts would apply to wines fully controlled by the pro- ducer from production to final sale. Because the tax bill was passed a week before provi- sions were to be implemented on Jan. 1, 2018, the TTB created the "alternate procedure" in March to allow wineries to collect tax credits until June 30. Many wineries, especially those making less than 250,000 gallons, were concerned that on June 30 the federal excise tax reductions for wine produced at custom crush facilities or stored at bonded wine cellars would be elimi- nated. The excise tax rate would then increase to the full rate of $1.07, a 15-fold increase for small wineries. In addition, wineries were un- certain if alternate premises were permissible. In May, TTB allayed those concerns with the release of two Industry Circulars, Number 2018 - 1A and Number 2018 - 3. The first circular was released on May 17. That circular, titled "Alternate Procedure for a Wine Pro- ducer to Tax Determine and Tax Pay Wine of Its Production That Is Stored Untaxpaid at a Bonded Wine Cellar," states that producing wineries may "tax determine and tax pay, upon removal from bond, wine of their pro- duction stored untaxpaid at a bonded wine cellar (BWC) or bonded winery, as if it were removed from the producing winery's bonded premises." In addition, the expiration date for the alternate procedure has been extended through Dec. 31, 2019. Wine East Covering Eastern North America New Guidelines from TTB WATERLOO CONTAINER Experience Service Expertise OTHER GUYS Don't be Penny Wise and Pound Foolish Choosing a packaging provider can be one of the most important decisions you make when planning and branding your product. Be sure to look past the pennies to the overall value you are getting with your packaging purchases. Look for real people with real experience. Look for quality and availability. Look to Waterloo Container. 888-539-3922 • waterloocontainer.com Weighing Your Packaging Options?