[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 362 Introduced in Senate (IS)]
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116th CONGRESS
1st Session
S. 362
To amend the Internal Revenue Code of 1986 to reform taxation of
alcoholic beverages.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 6, 2019
Mr. Wyden (for himself, Mr. Blunt, Mr. Carper, Mr. Roberts, Ms.
Stabenow, Mr. Moran, Mr. Casey, Mr. Portman, Mr. Bennet, Mrs. Capito,
Ms. Baldwin, and Mr. Gardner) introduced the following bill; which was
read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to reform taxation of
alcoholic beverages.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Craft Beverage Modernization and Tax
Reform Act of 2019''.
SEC. 2. PERMANENT EXTENSION OF CERTAIN PROVISIONS.
(a) Production Period for Beer, Wine, and Distilled Spirits.--
(1) In general.--Paragraph (4) of section 263A(f) of the
Internal Revenue Code of 1986, as added by section 13801(a) of
Public Law 115-97, is amended to read as follows:
``(4) Exemption for aging process of beer, wine, and
distilled spirits.--For purposes of this subsection, the
production period shall not include the aging period for--
``(A) beer (as defined in section 5052(a)),
``(B) wine (as described in section 5041(a)), or
``(C) distilled spirits (as defined in section
5002(a)(8)), except such spirits that are unfit for use
for beverage purposes.''.
(2) Effective date.--The amendment made by this subsection
shall apply to interest costs paid or accrued in calendar years
beginning after December 31, 2017.
(b) Reduced Rate of Excise Tax on Beer.--
(1) In general.--Paragraph (1) of section 5051(a) of the
Internal Revenue Code of 1986, as amended by section 13802(a)
of Public Law 115-97, is amended to read as follows:
``(1) In general.--
``(A) Imposition of tax.--A tax is hereby imposed
on all beer brewed or produced, and removed for
consumption or sale, within the United States, or
imported into the United States. Except as provided in
paragraph (2), the rate of such tax shall be--
``(i) $16 on the first 6,000,000 barrels of
beer--
``(I) brewed by the brewer and
removed during the calendar year for
consumption or sale, or
``(II) imported by the importer
into the United States during the
calendar year, and
``(ii) $18 on any barrels of beer to which
clause (i) does not apply.
``(B) Barrel.--For purposes of this section, a
barrel shall contain not more than 31 gallons of beer,
and any tax imposed under this section shall be applied
at a like rate for any other quantity or for fractional
parts of a barrel.''.
(2) Reduced rate for certain domestic production.--
Subparagraph (A) of section 5051(a)(2) of the Internal Revenue
Code of 1986, as amended by section 13802(b) of Public Law 115-
97, is amended--
(A) in the heading, by inserting ``$3.50 a barrel''
before ``rate'', and
(B) by striking ``$7'' and all that follows through
``January 1, 2020)'' and inserting ``$3.50''.
(3) Application of reduced tax rate for foreign
manufacturers and importers.--Subsection (a) of section 5051 of
the Internal Revenue Code of 1986, as amended by section
13802(c) of Public Law 115-97, is amended--
(A) in subparagraph (A)(i)(II) of paragraph (1), as
amended by paragraph (1) of this subsection, by
inserting ``but only if the importer is an electing
importer under paragraph (4) and the barrels have been
assigned to the importer pursuant to such paragraph''
after ``during the calendar year'', and
(B) in paragraph (4)--
(i) in subparagraph (A), by striking
``paragraph (1)(C)'' and inserting ``paragraph
(1)(A)'', and
(ii) in subparagraph (B), by striking ``The
Secretary'' and inserting ``The Secretary of
the Treasury, in consultation with the
Secretary of Health and Human Services and the
Secretary of the Department of Homeland
Security,''.
(4) Controlled group and single taxpayer rules.--Paragraph
(5) of section 5051(a) of the Internal Revenue Code of 1986, as
amended by section 13802(d) of Public Law 115-97, is amended by
striking ``paragraph (1)(C)(i)'' each place it appears and
inserting ``paragraph (1)(A)(i)''.
(5) Effective date.--The amendments made by this subsection
shall apply to beer removed after December 31, 2017.
(c) Transfer of Beer Between Bonded Facilities.--
(1) In general.--Section 5414 of the Internal Revenue Code
of 1986, as amended by section 13803(a) of Public Law 115-97,
is amended to read as follows:
``SEC. 5414. TRANSFER OF BEER BETWEEN BONDED FACILITIES.
``(a) In General.--Beer may be removed from one brewery to another
brewery, without payment of tax, and may be mingled with beer at the
receiving brewery, subject to such conditions, including payment of the
tax, and in such containers, as the Secretary by regulations shall
prescribe, which shall include--
``(1) any removal from one brewery to another brewery
belonging to the same brewer,
``(2) any removal from a brewery owned by one corporation
to a brewery owned by another corporation when--
``(A) one such corporation owns the controlling
interest in the other such corporation, or
``(B) the controlling interest in each such
corporation is owned by the same person or persons, and
``(3) any removal from one brewery to another brewery
when--
``(A) the proprietors of transferring and receiving
premises are independent of each other and neither has
a proprietary interest, directly or indirectly, in the
business of the other, and
``(B) the transferor has divested itself of all
interest in the beer so transferred and the transferee
has accepted responsibility for payment of the tax.
``(b) Transfer of Liability for Tax.--For purposes of subsection
(a)(3), such relief from liability shall be effective from the time of
removal from the transferor's bonded premises, or from the time of
divestment of interest, whichever is later.''.
(2) Effective date.--The amendment made by this subsection
shall apply to any calendar quarters beginning after December
31, 2017.
(d) Reduced Rate of Excise Tax on Certain Wine.--
(1) In general.--Section 5041(c) of the Internal Revenue
Code of 1986, as amended by section 13804 of Public Law 115-97,
is amended--
(A) in the heading, by striking ``for Small
Domestic Producers'',
(B) by amending paragraph (1) to read as follows:
``(1) Allowance of credit.--
``(A) In general.--There shall be allowed as a
credit against any tax imposed by this title (other
than chapters 2, 21, and 22) an amount equal to the sum
of--
``(i) $1 per wine gallon on the first
30,000 wine gallons of wine, plus
``(ii) 90 cents per wine gallon on the
first 100,000 wine gallons of wine to which
clause (i) does not apply, plus
``(iii) 53.5 cents per wine gallon on the
first 620,000 wine gallons of wine to which
clauses (i) and (ii) do not apply,
which are produced by the producer and removed during
the calendar year for consumption or sale, or which are
imported by the importer into the United States during
the calendar year.
``(B) Adjustment of credit for hard cider.--In the
case of wine described in subsection (b)(6),
subparagraph (A) of this paragraph shall be applied--
``(i) in clause (i) of such subparagraph,
by substituting `6.2 cents' for `$1',
``(ii) in clause (ii) of such subparagraph,
by substituting `5.6 cents' for `90 cents', and
``(iii) in clause (iii) of such
subparagraph, by substituting `3.3 cents' for
`53.5 cents'.'',
(C) by striking paragraphs (2) and (8),
(D) by redesignating paragraphs (3) through (6) as
paragraphs (2) through (5), respectively,
(E) by redesignating paragraph (9) as paragraph
(6), and
(F) by amending paragraph (7) to read as follows:
``(7) Regulations.--The Secretary may prescribe such
regulations as may be necessary to carry out the purposes of
this subsection, including regulations to ensure proper
calculation of the credit provided in this subsection.''.
(2) Allowance of credit for foreign manufacturers and
importers.--Subsection (c) of section 5041 of the Internal
Revenue Code of 1986, as amended by paragraph (1), is amended--
(A) in subparagraph (A) of paragraph (1), by
inserting ``but only if the importer is an electing
importer under paragraph (6) and the wine gallons of
wine have been assigned to the importer pursuant to
such paragraph'' after ``into the United States during
the calendar year'', and
(B) in paragraph (6)--
(i) in subparagraph (A), by striking
``paragraph (8)'' and inserting ``paragraph
(1)'',
(ii) in subparagraph (B), by striking ``The
Secretary'' and inserting ``The Secretary of
the Treasury, in consultation with the
Secretary of Health and Human Services and the
Secretary of the Department of Homeland
Security,'', and
(iii) in subparagraph (C), by striking
``paragraph (4)'' and inserting ``paragraph
(3)''.
(3) Effective date.--The amendments made by this subsection
shall apply to wine removed after December 31, 2017.
(e) Adjustment of Alcohol Content Level for Application of Excise
Tax Rates.--
(1) In general.--Paragraphs (1) and (2) of section 5041(b)
of the Internal Revenue Code of 1986, as amended by section
13805 of Public Law 115-97, are each amended by striking ``14
percent'' and all that follows through ``January 1, 2020'' and
inserting ``16 percent''.
(2) Effective date.--The amendments made by this subsection
shall apply to wine removed after December 31, 2017.
(f) Definition of Mead and Low Alcohol by Volume Wine.--
(1) In general.--Subsection (h) of section 5041 of the
Internal Revenue Code of 1986, as added by section 13806 of
Public Law 115-97, is amended--
(A) in paragraph (2), by striking ``the Secretary
shall'' each place it appears and inserting ``the
Secretary may'', and
(B) by striking paragraph (3).
(2) Effective date.--The amendments made by this subsection
shall apply to wine removed after December 31, 2017.
(g) Reduced Rate of Excise Tax on Certain Distilled Spirits.--
(1) In general.--Subsection (c) of section 5001 of the
Internal Revenue Code of 1986, as added by subsection (a) of
section 13807 of Public Law 115-97 and amended by subsection
(c) of such section, is amended--
(A) in the heading, by striking ``for 2018 and
2019'',
(B) in paragraph (3)(B), by striking ``The
Secretary'' and inserting ``The Secretary of the
Treasury, in consultation with the Secretary of Health
and Human Services and the Secretary of the Department
of Homeland Security,'', and
(C) by striking paragraph (4).
(2) Effective date.--The amendments made by this subsection
shall apply to distilled spirits removed after December 31,
2017.
(h) Bulk Distilled Spirits.--
(1) In general.--Section 5212 of the Internal Revenue Code
of 1986, as amended by section 13808 of Public Law 115-97, is
amended--
(A) by striking the last two sentences,
(B) by striking ``Bulk distilled spirits on which''
and inserting ``Distilled spirits on which'', and
(C) by striking ``bulk distilled spirits for'' and
inserting ``distilled spirits for''.
(2) Effective date.--The amendments made by this subsection
shall apply to distilled spirits transferred in bond after
December 31, 2017.
(i) Simplification of Rules Regarding Records, Statements, and
Returns.--
(1) In general.--Subsection (a) of section 5555 of the
Internal Revenue Code of 1986 is amended by striking ``For
calendar quarters beginning after the date of the enactment of
this sentence, and before January 1, 2020, the Secretary'' and
inserting ``The Secretary''.
(2) Effective date.--The amendments made by this subsection
shall apply to any calendar quarters beginning after February
9, 2018.
SEC. 3. USE OF WHOLESOME PRODUCTS SUITABLE FOR HUMAN FOOD CONSUMPTION
IN THE PRODUCTION OF FERMENTED BEVERAGES.
(a) In General.--Not later than the date that is 1 year after the
date of the enactment of this Act, the Secretary of the Treasury or the
Secretary of the Treasury's delegate shall amend subpart F of part 25
of subchapter A of chapter I of title 27, Code of Federal Regulations,
to ensure that, for purposes of such part, wholesome fruits,
vegetables, and spices suitable for human food consumption that are
generally recognized as safe for use in an alcoholic beverage and that
do not contain alcohol are generally recognized as a traditional
ingredient in the production of fermented beverages.
(b) Definition.--For purposes of this section, the term ``fruit''
means whole fruit, fruit juices, fruit puree, fruit extract, or fruit
concentrate.
(c) Rule of Construction.--Nothing in this section shall be
construed to revoke, prescribe, or limit any other exemptions from the
formula requirements under subpart F of part 25 of subchapter A of
chapter I of title 27, Code of Federal Regulations, for any ingredient
that has been recognized before, on, or after the date of the enactment
of this Act as a traditional ingredient in the production of fermented
beverages.
SEC. 4. INCREASED FUNDING FOR THE ALCOHOL AND TOBACCO TAX AND TRADE
BUREAU.
(a) In General.--In addition to any other amounts authorized to be
appropriated to the Alcohol and Tobacco Tax and Trade Bureau, there is
authorized to be appropriated--
(1) for fiscal year 2019, $15,000,000, to remain available
until September 30, 2020; and
(2) for fiscal year 2020, $15,000,000, to remain available
until September 30, 2021.
(b) Availability of Funds.--Of the amounts authorized to be
appropriated under subsection (a), for each of fiscal years 2019 and
2020--
(1) $5,000,000 shall be for the costs of accelerating the
processing of formula and label applications;
(2) $5,000,000 shall be for the costs of programs to
enforce trade practice violations of the Federal Alcohol
Administration Act (27 U.S.C. 201 et seq.); and
(3) $5,000,000 shall be for the purpose of carrying out the
provisions of this Act and the amendments made by this Act,
including accelerating the processing of permit applications
for non-industrial alcohol production and distribution.
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