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TTB Sets Procedures for Quarterly CBMA Alcohol Excise Refunds Beginning in 2023

The Alcohol and Tobacco Tax and Trade Bureau is setting new procedures for claiming Craft Beverage Modernization Act tax reductions beginning in 2023. The agency’s temporary rule implements the transfer of authority to administer CBMA provisions from CBP to TTB, and creates a new system wherein importers will claim refunds retroactively each quarter, rather than at time of entry. Producer registration, assignment of credits and importer claims will all be filed in the agency’s myTTB online system and tied to data filed in ACE at entry.

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TTB also issued a concurrent proposed rule to extend the new procedures indefinitely, as well as amend the regulations so that only distilled spirit producers may assign tax credits to importers, bringing requirements for spirits in line with those for beer and wine. Comments on the proposed rule are due Nov. 22.

The new regulations are required by the Tax Relief Act of 2020, which made CBMA provisions permanent but also transferred their administration to TTB and made claims retroactive. Under the Tax Relief Act, “importers must pay the full tax rate on imported alcohol products to CBP and then subsequently submit refund claims for the difference between the tax paid at the full rate and the amount that would have been paid if tax liability had been calculated using the tax benefits foreign producers assigned to them.”

Under the new scheme, foreign producers will be required to register with TTB prior to assigning tax benefits to importers. Importers must then submit a claim, no earlier than the end of the calendar quarter in which it is claiming benefits, for a refund based on the foreign producer’s assignment of tax benefits to them, TTB said.

“TTB will administer the CBMA import refund program through two components of an online system, ‘myTTB,’” the agency said. “Using the online system, foreign producers will register, receive a TTB-issued Foreign Producer ID, and assign the CBMA tax benefits to importers. The importers will use the online system to elect to receive CBMA tax benefits assigned to them by foreign producers, and to submit refund claims based on those assignments and the information submitted by the importers themselves through ACE in connection with entries that are subject to CBMA claims,” it said.

Producer registration will include submission of basic identifying information for the producer, as well as information on common ownership with other operations due to limits on tax benefits available for assignment from producers within the same ownership group. TTB will also require the producer’s FDA food facility registration number, or the FDA registration number of the original producer, so as to avoid a “separate, potentially duplicative system for validation of foreign producers,” it said. Producers of industrial alcohol that do not register with FDA may provide a certification that they are not required to register.

Once the foreign producer has registered and received a foreign producer ID, it may begin assigning CBMA tax benefits to importers. To make the assignment, the producer will be required to provide the importer’s TTB permit number or reference number. Once benefits are assigned, the foreign producer may not revoke or reduce the assigned benefits unless the importer elects not to take the assignment, consistent with the CBP procedures TTB is replacing, the agency said.

Importers will then claim the refunds in myTTB, based on information they have already submitted for the relevant entries in ACE, TTB said. “TTB has attempted to streamline the claims process by relying upon information the importer would have already filed with CBP about the applicable entries through ACE, as well as information about the foreign producer’s assignment of benefits to that importer through TTB’s electronic system,” it said.

“TTB will separately publish alternate procedures for submitting claims and supporting documentation in the potentially rare cases where an importer is unable to file entry or entry summary data electronically in ACE and/or perfect a claim through the procedure established in the temporary regulations,” it said.

Refunds may be requested by importers quarterly. The regulations “provide that the calendar quarter must end before CBMA import refund claims may be filed for any consumption entries made during that quarter,” TTB said. “Under the electronic submission process described above, TTB envisions that most valid claims will be paid shortly after they are filed,” the agency said.

Claims will be “treated in the same manner as an overpayment of tax,” with any interest that has accrued included in the refund, TTB said. “As with any claim related to an overpayment, if TTB determines that the importer is entitled to the amount claimed, TTB will pay the claim along with any required interest,” it said. Deadlines for refund requests will be the same as those for overpayment of taxes, i.e., three years from the time the return was filed or two years from the time the tax was paid, whichever expires later, TTB said.