Full Excise Taxes on Alcohol Imports to Apply as CBP Considers Regulatory Changes

CBP and the Treasury Department are looking at making changes to regulations to allow for refunds for alcoholic beverage imports that are allowed a lower excise tax rate, CBP said in a CSMS message. In the meantime, "importers will continue to pay the full excise tax rate at time of entry summary filing," CBP said. President Donald Trump signed tax legislation late last year that cut excise taxes on beer, wine and distilled spirits in 2018 and 2019 (see 1712180033), though CBP has required full excise taxes as the involved agencies decide how to implement the changes (see 1801310035).

The legislation allows for "reduced tax rates and/or tax credits" to be "applicable to importations of certain limited quantities of distilled spirits, beer, or wine imported from each qualifying foreign producer," CBP said. In order "for an importer to be eligible to receive a reduced tax rate or a tax credit, the importer must be able to substantiate that the foreign producer has assigned an allotment of its reduced tax rate or tax credits." Regulatory changes are being considered to give CBP the ability to issue refunds on unliquidated entries, it said.

CBP suggests that, "in anticipation of the new regulations," importers file protests on unliquidated entries for which a reduced tax rate or credit might be due. "Such protests should, at a minimum, include an Excel spreadsheet with information including entry number(s), line number(s) and the following information by line number: producer, alcohol type (beer, wine, cider or distilled spirits), tax rate or credit assigned and requested, and quantity claimed for tax rate or credit," the agency said. Refund request processing won't happen before Jan. 15, it said.

Importers should not use Post Summary Corrections to pursue refunds until the regulatory changes are made and the necessary programming is in place, CBP said. Any PSCs submitted before then will be rejected by the Centers of Excellence and Expertise, it said. After the new regulations take effect, "importers will need to identify entry summary lines that they believe qualify for excise tax relief," it said. "This identification will serve as the importer’s request for relief. CBP plans to develop a flag at the entry summary line level in the Automated Commercial Environment (ACE) that importers may utilize to request a refund."

Importers given tax reductions from multiple foreign producers should keep the necessary information for each foreign producer, CBP said. Internal records necessary for importers to substantiate eligibility for the reduced rates will include:

• Foreign producer’s name
• Foreign producer’s manufacturing facility address and Food Safety Modernization Act (FSMA) registration number
• Number of barrels of beer, number of gallons of wine, and number of proof gallons of distilled spirits eligible for each reduced rate/tax credit assigned to the importer for the calendar year by the representative of the foreign producer authorized to assign its allotment, and documentation showing that quantity as assigned to that specific importer
• Contact information for such authorized representative
• Statement from the authorized representative of the qualifying foreign producer that the number of barrels or wine/proof gallons assigned by the foreign producer (including any members of a controlled group) to all importers for the calendar year does not exceed the quantities allowed by law and does not exceed the foreign producer's capacity.