Craft Beverage Modernization Act (CBMA) FAQ’S
On February 28, 2019, CBP will start reviewing and liquidating CBMA claims, in chronological order. This means that CBP will start reviewing January 2018 entries first. Once reviewed, entries will immediately liquidate, and refunds or bills-in some cases-are issued.
General – Refund. When submitting a request to TTB for a refund for 14-16% wine where I paid the higher rate, where should I send my request for a letter from CBP, as mentioned in CSMS# 18-000708?
Pursuant to the regulation, requests may be sent to CBP. Please send requests to the Center that controls the entry. Most of the Alcohol industry aligns with the Agriculture CEE. For the Agriculture CEE, please send requests to the Agriculture Center at CEE-Agriculture@cbp.dhs.gov. Please include the entry numbers and Importer of record number with your requests.
General – Tax Rate or Tax Credit. What are the maximum quantities that an assigning entity can allocate per tax rate or credit for foreign produced alcohol?
The quantitative limits for CBMA adjusted tax rates or credits are determined per controlled group as defined by the CBMA and 26 U.S.C. 1563. For example, a controlled group may allocate to any number of importers the lower $16.00 per barrel tax rate to a maximum of 6,000,000 barrels in a given calendar year. The sum quantity of beer imported that is receiving a reduced CBMA tax rate and produced by a controlled group may not exceed 6,000,000 barrels. All quantitative limits are specified in the Craft Beverage Modernization and Tax Reform Act of 2017.
General – Tax Rate or Tax Credit. Is there guidance from CBP regarding the tax rate for wines containing more than 14% but not more than 16% alcohol by volume?
In CSMS #18-000708, CBP issued separate procedures and requirements addressing the CBMA‘s temporary changes to the tax classification of certain wines containing more than 14% but not more than 16% alcohol by volume.
General – Tax Rate or Tax Credit. How can I take new reduced tax rates and tax credits for domestically produced alcohol?
U.S. Department of Treasury, Alcohol Tax and Tobacco Tax and Trade Bureau (TTB) is responsible for the collection of tax on domestically produced alcohol products. TTB has issued public guidance and FAQs on the implementation of the Tax Cuts and Jobs Act of 2017 Craft Beverage Modernization and Tax Reform which can be found on their website.
General – Tax Rate or Tax Credit. Is it possible to qualify for reduced tax rates or tax credits without an allocation from an assigning entity?
No. Per the CBMA, reduced tax rates and tax credits must be assigned by a foreign producer/assigning entity. The sum quantity of alcohol that is receiving a reduced CBMA tax rate and produced by a single assigning entity may not exceed the quantitative limits set forth in the CBMA. All quantitative limits are specified in the Craft Beverage Modernization and Tax Reform Act of 2017.
General – Tax Rate or Tax Credit. If an entry comes in 2019, can importers take the tax credit in 2020 and beyond?
The benefit of the CBMA applies to imports of a given calendar year and can only be “taken” on the imports during that given calendar year. If the goods are imported in 2018 or 2019, CBMA was not claimed at the time of entry, and the entries have not liquidated, however, you may file a post summary correction (PSC) on unliquidated entries within the relevant timeframe (within 300 days from the date of entry and up to 15 days of the scheduled liquidation date, whichever date is earlier) regardless of whether that date falls outside of the 2018-2019 calendar year. If the entry has liquidated without the benefit of CBMA, the filer/importer may file a protest within 180 days of liquidation regardless if that date falls outside of the 2018-2019 calendar year.
Importers are strongly encouraged to utilize the CBMA flag at time of entry summary. Pursuant to CSMS message # 18-000511, importers will use the CBMA entry summary line level flag (CBMA flag) to identify imported alcohol for which the importer has received a CBMA allocation from a foreign producer/assigning entity. The CBMA flag may be transmitted at time of entry summary filing, or subsequently as a Post Summary Correction (PSC) for unliquidated entry summaries.
CBP has determined that the single taxpayer provision does not apply to foreign transactions as the taxpayer is the importer and the provision applies to producers who are taxpayers.
Please direct all CBMA related inquiries to CBMA@cbp.dhs.gov.
General – Other. To be eligible for CBMA, do FTZ withdrawals need to be admitted into the FTZ in 2018 or must goods have been withdrawn from the FTZ in 2018?
To be eligible for CBMA, alcoholic beverages must be imported during calendar years 2018 and 2019. In the case of FTZ, importation occurs before the goods are admitted. Only when the goods are withdrawn for consumption can a CBMA claim be made.
General – Other. I have 200 entries in which I would like to claim CBMA. For DIS purposes, I made one spreadsheet for all 200 entries, is this allowed in DIS since the DIS subject line must indicate the entry number?
One CBMA Spreadsheet can have multiple entry numbers, as long as they pertain to one importer. You will use the entry number with the earliest import date for DIS labeling purposes.
The importer may receive a CBP form 29, Notice of Proposed Action indicating that CBP proposes to liquidate the claim at the higher non-CBMA rate. If CBP receives no response, the action is taken. Additionally, since entries will immediately liquidate, filers/importers may go to CBPs bulletin notice website for liquidation disposition of the CBMA entries.
General – Other. If 2018 entry summaries were filed manually and NOT through ACE, where should I submit my claim?
For non-ABI entries (paper), please submit the Assignment Certification, CBMA Spreadsheet, and CBMA Controlled Group Spreadsheet to the CBMA mailbox at CBMA@cbp.dhs.gov.
General – Other. If an Importer has two foreign beer producers, would they have 12 million barrels of beer to claim?
It is possible if both controlled groups assigned the importer full CBMA allocations. Each controlled group may allocate up to 6 million barrels at the $16.00 rate. The two producers must not be part of the same controlled group, as they would exceed the 6 million barrel quantitative limit.
In order to make a complete CBMA claim, the importer must, in addition to flagging each line for which a CBMA claim is asserted, or identifying CBMA as the protest issue, provide CBP with a complete and accurate CBMA Spreadsheet, Controlled Group Spreadsheet, and Assignment Certification. Missing, incomplete or inaccurate documents may result in the liquidation of entries at the higher non-CBMA rate and/or enforcement action. Templates for these three documents are posted on CBP.gov at https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017.
- For CBMA claims submitted at time of entry or PSC, these documents must be uploaded into the Document Image System (DIS).
- For CBMA claims filed via protest, these documents must be uploaded in the Automated Commercial Environment (ACE) protest module, and NOT via DIS. Each CBMA protest must include all three required CBMA supporting documents.
Substantiating Documentation – Assignment Certification. Should the annual production be the amount allocated to me or the amount that I received from supplier?
Annual production is the total yearly quantity produced by the brewer/distiller/winery. This includes quantities sold globally, not just to U.S. importers.
Substantiating Documentation – Assignment Certification. How do I seek a refund for 14-16% wines which I was previously required to pay the higher rate to CBP? Does 14-16% wine require an Assignment Certification?
The 14-16% does not require an Assignment Certification from a foreign producer in order to take the lower $1.07 rate. You may pay this lower rate at time of entry. If the higher rate was paid at the time of entry and you are seeking a refund, you must go through TTB. Please follow the guidance in CSMS # 18-000708
Substantiating Documentation – Assignment Certification. Should the spreadsheets be in XLS or XLSX format? I ask because DIS email only takes XLS format.
Spreadsheets should be in XLSX format. Please see note 6 in Appendix B, page 86 which states that XLSX is accepted in DIS for certain programs, such as CBMA.
Substantiating Documentation – Assignment Certification. For wine imports, should the Assignment Certification state the credit or rate per gallon?
The Assignment Certification should state the actual credit for wine allowed by CBMA, for example $.1.00, $.90 or $.535.
Substantiating Documentation – CBMA Spreadsheet. On the CBMA spreadsheet, how do I calculate the wine tax credit?
The wine tax credit is calculated differently from the tax rates. Calculate: IRT paid - (Quantity x credit). Refund not to exceed IRT paid. Column F, the importer should choose the correct tax credit (not rate) for the designated wine tranche. In column G, they should enter the quantity claimed on the line (in gallons). Column (I) will essentially equal (H: IRT) – (J: Refund).
Substantiating Documentation – CBMA Spreadsheet. In instances where an intermediary has sold alcoholic beverages that are potentially eligible for CBMA to an importer, how should a CBMA Assignment Certification be completed?
To be eligible for CBMA rates or credits, a foreign producer/assigning entity must issue an Assignment Certification to the importer. An intermediary supplier who is not the producer may not make an assignment. Please refer to the TTB CBMA website for clarification on who qualifies as the producer.
Substantiating Documentation – CBMA Spreadsheet. Can I have more than one controlled group on a CBMA Spreadsheet?
Importers may belong to more than one controlled group. For every controlled group that the importer belong to, a new Controlled Group Spreadsheet is required. On the CBMA spreadsheet, you may have multiple entries on one spreadsheet as long as they pertain to one IOR, which in turn means that you could possibly have goods that were allocated by more than one foreign producer/assigning entity on one CBMA Spreadsheet.
Substantiating Documentation – CBMA Spreadsheet. The producer is allocating between 1 to 250,000 wine gallons to me. How do we account for this on the Assignment Certification letter?
On the Assignment Certification, the foreign producer must identify the alcoholic beverage (beer, wine or distilled spirits), quantity and which tranche or tier being allocated to you. For example, 1000 wine gallons at the $1 rate.
Substantiating Documentation – CBMA Spreadsheet. On the CBMA Spreadsheet, how should K, L, and M quantities be reported?
Report quantities out to the second decimal.
Substantiating Documentation – Other. What is the acceptable format for submitting CBMA documents to CBP for review?
CBMA documents are to be submitted via the Document Image System (DIS) via DIS email or DIS XML. Importers will submit the CBMA and Controlled Group spreadsheets (.xlsx) and CBMA Assignment Certification (.pdf) via the Document Image System (DIS). If an entry on which the importer is making a CBMA claim has liquidated, the CBMA claim may be filed via a protest, and documents must be uploaded into the Protest Module.
Substantiating Documentation – Other. Can multiple importers be covered under a single Assignment Certification?
No, only one Importer of Record should be listed on the assignment certification.
A complete CBMA claim must be identified by product claim number ‘C’, either at entry or Post Summary Correction (PSC), claiming the lower rate, and be accompanied by supporting documentation. Supporting documentation consists of the CBMA Spreadsheet, the Controlled Group Spreadsheet, and the Assignment Certification. A claim will not be considered complete until all three documents are on file with CBP.
Substantiating Documentation – Other. In Column L of the Controlled Group Spreadsheet how do I report the Total Assignment taken on past claims, as well as the assignment being taken on the current claim on a line by line basis?
To report both the assignment already taken and the assignment on the current claim under Column L, combine the amount from their last entry line claimed (i.e., Column M) with the amount being assigned on the instant line.
Substantiating Documentation – Other. Columns “M through N” list Annual Production. What is the unit of measure?
The production capacity would be reported in barrels (beer), wine gallons (wine) or proof gallons (spirits).
Substantiating Documentation – Other. Can you please explain how to capture sparkling wine vs. still wine tax credits on the CBMA Spreadsheet?
The dropdown only gives still wine choice, not sparkling wines. For all wines, the filer/importer must enter the credit amount allocated to them by the foreign producer/assigning entity and not the rate. The credit can be $1.00, $.90, or $.535. For example, natural sparkling wine for non-CBMA imports is $3.40 per wine gallon, however, with the CBMA $1.00 credit, the rate is $2.40 per wine gallon.
Follow normal procedures for submission of a paper protest by hand carrying or mailing protest to the port/center. Supporting documentation for CBMA claims (Controlled Group Spreadsheet, CBMA Spreadsheet and Assignment Certification) filed via paper protests should be emailed to CBMA@cbp.dhs.gov. The protest number must be in the subject line of the email.
Post Summary Corrections or Protests – Protest. If I file a protest, should I upload the CBMA Spreadsheet, Assignment Certification, and Controlled Group Spreadsheet only, or do I have to submit the entry package?
For a protest including a CBMA claim, the only additional documents required (above the standard protest requirements as established in 19 CFR 174 Subpart B) are the three CBMA documents. Please be mindful that you have one opportunity to protest, so all issues (even those beyond CBMA) must be raised, following Part 174 requirements.
Post Summary Corrections or Protests – Protest. Can a protest for a CBMA claim have multiple entries?
Unlike post summary corrections (PSC), filers/importers may include up to 9,999 entries on one protest.
Post Summary Corrections or Protests – Other. How long do importers have to submit all the protests and post summary corrections (PSC) for their entries for 2018?
That depends on the entry date and liquidation of the entries. You have until the 300th day from the date of entry and up to 15 days from the date of scheduled liquidation, whichever is earlier, to file a PSC to claim CBMA. You have 180 days from the date of liquidation to file a protest to claim CBMA.
CBP CBMA Producer definition - What is the definition of a foreign beer brewer, foreign wine producer and foreign distilled spirits operation for CBMA purposes?
For CBMA purposes, the definition of a foreign beer brewer, foreign wine producer and foreign distilled spirits operation that constitute entities with authority to execute an Assignment Certification allocating CBMA tax benefits to an U.S. importer, are as follows:
Foreign Beer Brewer:
Any person or entity outside the United States who brews beer or produces beer for sale. Beer that is “brewed” or “produced” includes beer brewed by fermentation or produced by the addition of water or other liquids during any stage of production. The entire volume of beer to which water or other liquids had been added will be considered “brewed” or “produced” to the extent that these production activities are undertaken in good faith in the ordinary course of production and not solely for the purpose of obtaining a tax benefit. Additionally, prior to importation, the process of concentration of beer (removal of water) and reconstitution of beer are considered authorized processes in the production of beer under the CBMA.
Activities that do not constitute “brewed” or “produced” include, but are not limited to,
- Blending or combining two beers;
- Beer received in containers without any production activity enumerated above occurring; and
- Beer received and merely bottled.
Foreign Wine Producer:
For CMBA purposes, a foreign wine producer is a person or entity outside of the United States that produces wine. In addition to the entire volume of wine produced by fermentation, a foreign wine producer may count as produced the entire volume of wine that has undergone the following activities, if undertaken in good faith in the ordinary course of production, and not solely for the purpose of obtaining a tax credit:
- Sweetening – Sweetening material is added after fermentation for the purpose of sweetening the wine.
- Addition of spirits – Certain brandy, grain, or wine spirits authorized to be used in wine production are added.
- Amelioration – Water, sugar, or a combination of both is added to wine to adjust the wine’s acid content.
- Production of formula wine – Formula wine includes wine that may contain added flavoring or wine treating materials.
The production of sparkling wine and carbonated wine are also considered "production" for CBMA purposes. Both sparkling wine and artificially carbonated wines created through secondary fermentation in a closed container or through injection of carbon dioxide are considered to be "produced" for CBMA purposes. Accordingly, a foreign wine producer that creates a sparkling wine or carbonated wine from a purchased still wine may be considered a producer of the sparkling or carbonated wine.
Bottling and/or blending that does not involve one of the operations listed above is not considered production. If a foreign wine producer bottles a wine that is a blend of wine of its own production with wine produced by another foreign wine producer, it may assign the CBMA benefit only on the portion of wine it produced and not on the portion produced by the other foreign wine producer.
Foreign Distilled Spirits Operation:
For purposes of the CBMA, a foreign distilled spirits operation who may assign a reduced rate to the importer includes any person or entity outside the United States that,
Note that the distilled spirits that a foreign distilled spirits operation may assign to a U.S. importer for CBMA tax benefits must be produced or processed outside of the United States.