House and Senate Members Reintroduce the Craft Beverage Modernization and Tax Reform Act

By Michael Kaiser, Vice President

1.31.2017

On Monday January 30th, leading House and Senate Members reintroduced the Craft Beverage Modernization and Tax Reform Act. This comprehensive bill would drastically reduce the federal excise tax (FET) burden on wineries, breweries and distilleries. Every congressional district in the United States includes a brewery, winery, distillery, importer or industry supplier, all of whom operate under an outdated tax structure.  A reduction in the FET will result in consumers benefiting from greater choice and allow businesses to invest in product development, improve infrastructure and stimulate employment in communities across the country. WineAmerica strongly supports the passage of the Craft Beverage Modernization and Tax Reform Act.

Senate Introduction

The Senate version of the bill (S.236) was introduced by Senator Ron Wyden (D-OR). Senator Wyden has been the main architect of this bill and originally conceived it in June 2015. He was joined by eleven of his fellow Senators on the new version of the bill. This bipartisan piece of legislation features six Democrats and six Republicans as original co-sponsors, they are:

Democrats
Tammy Baldwin- WI
Michael Bennet- CO
Thomas Carper- DE
Robert Casey- PA
Debbie Stabenow- MI
Ron Wyden- OR

Republicans
Roy Blunt- MO
Shelly Moore Capito- WV
Cory Gardner- CO
Jerry Moran- KS
Rob Portman- OH
Pat Roberts- KS

Senator Blunt of Missouri has also been tireless in his support for the bill, he is the chief sponsor on the Republican side.

House Introduction

The House version of the bill (H.R. 747) was once again co-sponsored by Reps. Erik Paulson (R-MN-3) and Ron Kind (D-WI-3). They are joined by a diverse and bipartisan group:

Democrats:
Earl Blumenauer (OR-3)
Peter DeFazio (OR-4)
Ron Kind (WI-3)
Chellie Pingree (ME-1)
Mike Thompson (CA-5)

Republicans
Mark Amodei (NV-2)
Tom Emmer (MN-6)
Mike Kelly (PA-3)
Patrick McHenry (NC-10)
Dan Newhouse (WA-4)
David Reichert (WA-8)
Patrick Tiberi (OH-12)

Major Provisions for Wine

The major tax relief provisions specific to wine are nearly identical to the previous amended version of the bill, with some minor additions:

Expand Excise Tax Credit for Wineries

Under present law, wine is subject to an excise tax of between $1.07 and $3.40 per gallon, based on alcohol content and carbonation level. Qualifying small domestic wineries producing 250,000 wine gallons or less are eligible for a tax credit generally equal to 90 cents per gallon on the first 100,000 gallons produced, with that benefit phasing out between 150,000 gallons and 250,000 gallons. Hard cider is taxed as wine, subject to lower rates and a reduced credit amount. This provision removes the phaseout and replaces the credit with a new tiered credit system for wine produced in the U.S. or imported as follows: $1.00 for the first 30,000 wine gallons, $0.90 for the next 100,000 wine gallons, and $0.535 for the next 620,000 wine gallons. In addition, this provision removes the existing prohibition against claiming the credit for naturally sparkling wines. Conforming expansions are made to the cider credit. Find an estimate of your new tax rate here

Expand Alcohol Threshold for Certain Wines

Under current law, still wine is taxed at different rates based on alcohol content. Still wine containing not more than 14 percent ABV is taxed at $1.07. Still wine above 14 percent and less than 21 percent ABV is taxed at $1.57 per gallon. For labeling purposes only, alcohol content in wine may vary from the stated amount within certain tolerances, however no such tolerances exist for tax purposes. This proposal would provide that wines up to 16 percent ABV may qualify for the $1.07 tax rate, in order to provide more certainty for wine producers.  

Increased Carbonation Tolerances for Certain Low ABV Wines

Present law provides a tolerance for still wine of 0.392 gram of carbon dioxide per hundred milliliters of wine, which is generally taxed at $1.07 per wine gallon. Wines exceeding this limitation are taxed as “sparkling wine” at either $3.30 or $3.40 per wine gallon. This provision would increase that tolerance to 0.64 gram of carbon dioxide per hundred milliliters of wine for wines produced primarily from grape or solely from honey and water, which do not contain any other fruit and contains no more than 8.5 percent ABV.

Reduce Compliance and Tax Burdens for all Producers, and Improve Excise Tax Administration

The bill exempts beverage producers from complex capitalization rules for aged products, removing the requirement that bottle aging be considered in production time.  The bill also continues TTB funding increases that were secured in for FY 2016 of $5 million for label and formula approval and $5 million for fair trade practice enforcement. The increases are to be authorized for FY 2017 and FY 2018, along with an additional $5 million for the cost of implementing the bill, including new federal permit approvals.

Next Steps for WineAmerica

With the reintroduction of the bill, WineAmerica will now begin the process of securing additional co-sponsors. At the end of the last legislative year, the bill had nearly 300 House co-sponsors and 53 Senators. Along with our alcohol industry partners, our goal will be to match or exceed the totals from 2016. Concurrently we will be meeting with the relevant House and Senate Committees as the agenda for tax reform is set. We look forward to working with our members and Congress to to ensure the FET burden on the beer, wine and spirits sector is at the forefront of the discussion.

For more information please contact Michael Kaiser, mkaiser@wineamerica.org

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WineAmerica is the national voice the American wine industry. Based in Washington, D.C., WineAmerica represents wineries in 43 states and leads a coalition of state and regional wine and grape associations. As an industry leader, WineAmerica encourages the dynamic growth and development of American wineries and winegrowing through the advancement and advocacy of sound public policy.

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First Richard R. Smith Perpetual Award Presented to John Martini

SACRAMENTO, CA, January 25, 2017—The first-ever Richard R. Smith Perpetual Award for major contributions to the American grape and wine industry, and to research, was presented today to John Martini, co-owner of Martini Vineyards and Anthony Road Winery in New York’s Finger Lakes region.

The presentation was made by the Smith family at the annual Leadership Luncheon of Winegrape Growers of America, which co-sponsored the award with WineAmerica and the National Grape and Wine Initiative. The luncheon was held during the Unified Wine & Grape Symposium, the country’s largest industry conference and trade show.

The late Richard “Rich” Smith was the founder and co-owner of Paraiso Vineyards and Smith Family Wines in California’s Monterey region. He was also a very active member of all three sponsoring organizations as well as many others on the local and state levels. He was widely known and revered for his passion for the winegrowing industry, commitment to enhance its future, and collaboration with colleagues to achieve that goal. Those three words—Passion, Commitment, Collaboration—are on the award, which will be presented annually to a person reflecting Rich’s defining traits and huge accomplishments for the common good.

Rich’s family—wife Claudia, son Jason, and daughter Kacy—presented the first annual award to John Martini. Claudia Alexander Smith said, “I maintain fond memories of board meetings in D.C. with much ‘pounding the pavement’ in teams with the Martinis as we visited our Congressional representatives on behalf of Winegrape Growers of America and WineAmerica. John Martini never ceased to amaze both Rich and me with his boundless enthusiasm to build not just his and Ann’s dream business in the Finger Lakes, but the grape and wine business in every state across America. And it has changed from a few states growing wine grapes and making local wines, to every state having a healthy robust wine business. John continues to be very active with both those organizations to this very day, as well as the National Grape & Wine Initiative. Rich is surely smiling to see John Martini, with Ann by his side, receive this ‘Rich Smith’ perpetual award on behalf of WA, WGA, NGWI and Smith Family Wines.”

Jason Smith commented, “Our family is honored to have my Dad’s commitment to this industry represented by this perpetual award. John Martini is the East Coast version of my Dad…true dedication, passion and love for the industry, the community and most importantly his family. His tireless work and ability to put others before himself made this selection easy for the Richard R Smith Award. We know my Dad is raising his glass of pinot noir in celebration of this great achievement and recognition.”

Like Rich Smith, John Martini is family man first, a grape grower second, and winery owner third who shares a passion for research. John and his wife Ann started their Martini Vineyards on Seneca Lake in 1973 and opened Anthony Road Winery in 1985. Similar to the Smith family, the Martini’s run a family business in which their children have become co-owners and deeply involved in all aspects from production to finance and marketing. In fact, the rotating images on the home page of www.anthonyroadwine.com feature images of John and Ann, and another including all the generations. In addition, the Martini’s treat all their employees like extended family.

Also like Rich, John has been active in all three sponsoring organizations and many more on local and state levels. He has served as Chair for both NGWI and WGA, was President of the Seneca Lake Wine Trail and New York State Wine Grape Growers, and has served for many years on the Board of the New York Wine & Grape Foundation. The best way to describe John is that, “He’s always there.” When, for example, the NGWI Executive Committee would meet in Sacramento for a day, he would take a 5 am multi-segment flight from upstate New York, attend the meeting, then take a red-eye back home—before driving his van five hours to New York City to sell wine directly to consumers at Union Square Greenmarket.

“Rich and John are basically bicoastal spiritual brothers,” said Jim Trezise, President of WineAmerica, which initiated the award. “They first met through WGA in the early 1980’s and immediately developed a strong bond centered around their love for family, winegrowing, the community it creates, and the joy of working together for the common good. They are people you can always count on.”

Todd Newhouse, Chair of Winegrape Growers of America, said: “There isn’t a more deserving and more fitting recipient for this prestigious award than John Martini. John has always given more time than is expected to our national industry on both the winery and vineyard sides. When it comes to national issues, including research, he understood there shouldn’t be a distinction between wineries and vineyards because we are all one industry. No one understands that more than John.”

To select the recipient of the Richard R. Smith Perpetual Award, all three organizations and the Smith family were invited to submit nominations, with representatives from the three groups and the family making the final selection. There is no requirement that the recipient be associated with any of the three organizations, just that he or she has made major contributions to the American grape and wine industry while demonstrating the key characteristics of Rich Smith.

 

TTB Issues Industry Circular On Repeal of Bond Requirements

The Alcohol and Tobacco Tax and Trade Bureau (TTB) has issued an industry circular to provide final guidance on the removal of bond requirements for certain wineries, breweries and distilleries that are liable for not more than $50,000 in federal excise taxes in a calendar year. As WineAmerica has reported over the past year, this tax filing change was authorized as  part of the Fiscal Year 2016 Omnibus Appropriations Bill that was signed into law in December 2015. The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) was folded into the omnibus legislation as part of a comprehensive package. WineAmerica advocated strongly for the inclusion of these new rules in the larger appropriations bill. The new rules went into effect on January 1.

The new bond exemption is for wineries that expect to have not more than $50,000 in excise taxes imposed in calendar year 2017. Additionally, to qualify for the exemption wineries must have been liable or no more than $50,000 in federal excise taxes in 2016. Because eligibility for the bond exemption depends in part on a taxpayer’s expected tax liability, taxpayers who are eligible for the bond exemption and who want to operate without a bond must notify TTB and obtain TTB approval. New applicants must notify TTB that they are eligible for the bond exemption during the initial application process. Existing taxpayers who wish to apply for the bond exemption must do so by amending their permit.

TTB amended its application forms (including the online equivalents submitted using TTB’s Permits Online system) to allow taxpayers to notify TTB that they are eligible for the bond exemption and request TTB approval to operate without a bond. For more efficient processing, TTB recommends that taxpayers who have previously applied using Permits Online, as well as all new applicants, use Permits Online to submit applications and amendments. Existing taxpayers who are not yet users of Permits Online should file this amendment by paper application. TTB cannot begin processing an existing taxpayer’s bond termination request until it receives the taxpayer’s final tax payments covering any remaining excise taxes incurred in 2016.

For more information or if you have specific questions please contact Michael Kaiser at mkaiser@wineamerica.org or 202-223-5172

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WineAmerica is the national voice the American wine industry. Based in Washington, D.C., WineAmerica represents wineries in 43 states and leads a coalition of state and regional wine and grape associations. As an industry leader, WineAmerica encourages the dynamic growth and development of American wineries and winegrowing through the advancement and advocacy of sound public policy.

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Spring 2017: National Grape & Wine Policy Conference – Washington, DC

Raising Awareness of America’s Wine Industry in a New Administration

WineAmerica and Winegrape Growers of America are reuniting for the 2017 the National Grape & Wine Policy Conference, April 25 – 27.

The conference features learning, advocacy and networking. Taking place at the Grand Hyatt Hotel, minutes sideaway from Capitol Hill, this meeting is the industry’s opportunity to make its voice heard.

The conference will feature speakers and presentations on the politics and policies affecting our industry. It includes meetings of the WineAmerica Board of Directors and the State and Regional Association Advisory Council and a “Wines of America” reception on Capitol Hill for members of Congress and their staff. The tasting features wines from over 20 states, demonstrating the importance of the American wine industry. The 2016 Grape & Wine Policy Conference is your opportunity to make a difference regarding the laws that affect you.

Speakers and agenda to be announced.

All WineAmerica members are encouraged to attend.

Register Today!

Grand Hyatt Washington
1000 H St. NW
Washington, District of Columbia 20001
United States

202-637-4708

Family Winemakers of California and WineAmerica Announce Revised Joint Membership

Two organizations involved with public policy affecting the grape and wine industry—Family Winemakers of California, and WineAmerica—announced a revised joint membership program at the 2016 WIN Expo on December 1 in Santa Rosa, CA.

Family Winemakers focuses primarily on State-level issues, while WineAmerica’s focus is on federal policy in Washington, DC. A joint membership allows wineries to support, get information from, and be represented by these organization on both levels. The two organizations have had a joint membership program for several years, but the new revisions are intended to make it more affordable and attractive.

The new initiative was announced by Pete Downs, Acting President of Family Winemakers, and Jim Trezise, a long-time member of the WineAmerica Executive Committee, as part of a special presentation they gave on major policy developments in both Sacramento and Washington. Downs had also served on the Executive Committee and Board of WineAmerica for over a decade, so knows both organizations well.

“This is a logical fit,” he said. “We need eyes and ears, and feet on the ground, in both Capitols, and the joint membership is a great way to accomplish this.  Another benefit of WineAmerica is that it represents wineries in more than 40 states so has broad national reach legislatively.”

To become a member of Family Winemakers, wineries pay 6 cents per case, with a minimum of $300. To add the WineAmerica benefit, it’s an additional 2 cents per case, with a minimum of $100. Both memberships are through Family Winemakers, which then sends WineAmerica its share.

“WineAmerica’s broad-based membership around the country is a unique advantage that no other wine trade association has,” said Trezise. “Wine Institute, which is a great partner with national reach, nevertheless represents only California wineries, so we can add dozens of other states to create a much stronger coalition.  More than 80 of 100 U.S. Senators have WineAmerica member wineries in their states, and we like to remind the legislature of that.”

WineAmerica also has a State and Regional Associations Advisory Council (SRAAC) involving heads of trade associations throughout the country who regularly compare notes on what is happening in their states, and how they can help one another.  In addition, WineAmerica has retained professional government affairs counsel Meyers & Associates to protect and advance the industry’s interests.

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WineAmerica is the national voice the American wine industry. Based in Washington, D.C., WineAmerica represents wineries in 43 states and leads a coalition of state and regional wine and grape associations. As an industry leader, WineAmerica encourages the dynamic growth and development of American wineries and winegrowing through the advancement and advocacy of sound public policy.

www.wineamerica.org

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