Domestic alcohol producers are reaping the tax benefits from the Craft Beverage Modernization and Tax Reform Act (CBMA), which took effect January 1, 2018. Importers, who are also eligible for the tax cuts through appointment by foreign producers, have not received much guidance on the implementation of CBMA. Importers will be pleased to hear that Customs and Border Protection (CBP) has recently announced that further specific guidance and instructions on how to receive reduced tax rates and tax credits will be released in mid-October via the CSMS messaging system.
An announcement summarized the process that importers of certain limited quantities of distilled spirits, beer, and wine will follow once they are given the green light. For an importer to be eligible to receive the reduced tax rates, they will have to substantiate that the foreign producer/assigning entity has assigned an allotment of its reduced tax rate or tax credits to the distilled spirits, beer, or wine imported into the U.S. CBP will process and liquidate claims for entries made in calendar year 2018, beginning January 31, 2019 for importers. CBP will begin its review with the oldest entry on file with a CBMA claim and work forward chronologically. Any 2018 CBMA claims that are not substantiated with the required documentation byJanuary 31, 2019 are at risk of being liquidated without the benefit of the CBMA rate. If the importer has a complete and valid claim and the allocation limit has not been reached at the time of CBP review, CBP will liquidate the entry and apply theCBMA rate.
As will be discussed in greater detail in the mid-October 2018 CSMS message, importers will signal their CBMA claims with a CMBA flag to identify entry lines for which the CBMA rate will be claimed and declare the lower tax rate (as opposed to the excise tax rate required prior to the enactment of the CBMA). Additionally, importers will be required to file documentation to complete their CBMA claim, including two Excel spreadsheets (the CBMA Spreadsheet and the Controlled Group Spreadsheet) and an Assignment Certification to CBP issued on the letterhead of the foreign producer/assigning entity. A claim will not be considered complete until the CBMA Spreadsheet, the Controlled Group Spreadsheet and the Assignment Certification are provided to CBP. The forthcoming October 2018 CSMS message will include the required CBMA templates which will need to be filed for every entry for which the importer asserts a CBMA claim.