Title II — Beer

H.R. 747 · 115th Congress · Jan 30, 2017 · Lineage

II Beer

Sec. 201 Reduced rate of excise tax on beer

(a)

In general— Paragraph (1) of section 5051(a) of the Internal Revenue Code of 1986 is amended to read as follows:

“(1) In general

“(A) Imposition of tax—A tax is hereby imposed on all beer brewed or produced, and removed for consumption or sale, within the United States, or imported into the United States. Except as provided in paragraph (2), the rate of such tax shall be—

“(i) $16 on the first 6,000,000 barrels of beer—

“(I) brewed by the brewer and removed during the calendar year for consumption or sale, or

“(II) imported by the importer into the United States during the calendar year, and

“(ii) $18 on any barrels of beer to which clause (i) does not apply.

“(B) Barrel—For purposes of this section, a barrel shall contain not more than 31 gallons of beer, and any tax imposed under this section shall be applied at a like rate for any other quantity or for fractional parts of a barrel.”

(b)

Reduced rate for certain domestic production— Subparagraph (A) of section 5051(a)(2) of the Internal Revenue Code of 1986 is amended—

(1)

in the heading, by striking “$7” and inserting “$3.50”, and

(2)

by striking “$7” and inserting “$3.50”.

(c)

Application of reduced tax rate for foreign manufacturers and importers— Subsection (a) of section 5051 of the Internal Revenue Code of 1986 is amended—

(1)

in subparagraph (A)(i)(II) of paragraph (1), as amended by subsection (a) of this section, by inserting “but only if the importer is an electing importer under paragraph (4) and the barrels have been assigned to the importer pursuant to such paragraph” after “during the calendar year”, and

(2)

by adding at the end the following new paragraph:

“(4) Reduced tax rate for foreign manufacturers and importers

“(A) In general—In the case of any barrels of beer which have been brewed or produced outside of the United States and imported into the United States, the rate of tax applicable under clause (i) of paragraph (1)(A) (referred to in this paragraph as the reduced tax rate) may be assigned by the brewer (provided that the brewer makes an election described in subparagraph (B)(ii)) to any electing importer of such barrels pursuant to the requirements established by the Secretary of the Treasury under subparagraph (B).

“(B) Assignment—The Secretary of the Treasury, in consultation with the Secretary of Health and Human Services and the Secretary of the Department of Homeland Security, shall, through such rules, regulations, and procedures as are determined appropriate, establish procedures for assignment of the reduced tax rate provided under this paragraph, which shall include—

“(i) a limitation to ensure that the number of barrels of beer for which the reduced tax rate has been assigned by a brewer—

“(I) to any importer does not exceed the number of barrels of beer brewed or produced by such brewer during the calendar year which were imported into the United States by such importer, and

“(II) to all importers does not exceed the 6,000,000 barrels to which the reduced tax rate applies,

“(ii) procedures that allow the election of a brewer to assign and an importer to receive the reduced tax rate provided under this paragraph,

“(iii) requirements that the brewer provide any information as the Secretary determines necessary and appropriate for purposes of carrying out this paragraph, and

“(iv) procedures that allow for revocation of eligibility of the brewer and the importer for the reduced tax rate provided under this paragraph in the case of any erroneous or fraudulent information provided under clause (iii) which the Secretary deems to be material to qualifying for such reduced rate.

“(C) Controlled group—For purposes of this section, any importer making an election described in subparagraph (B)(ii) shall be deemed to be a member of the controlled group of the brewer, as described under paragraph (5).”

(d)

Controlled group and single taxpayer rules— Subsection (a) of section 5051 of the Internal Revenue Code of 1986, as amended by this section, is amended—

(1)

in paragraph (2)—

(A)

by striking subparagraph (B), and

(B)

by redesignating subparagraph (C) as subparagraph (B), and

(2)

by adding at the end the following new paragraph:

“(5) Controlled group and single taxpayer rules

“(A) In general—Except as provided in subparagraph (B), in the case of a controlled group, the 6,000,000 barrel quantity specified in paragraph (1)(A)(i) and the 2,000,000 barrel quantity specified in paragraph (2)(A) shall be applied to the controlled group, and the 6,000,000 barrel quantity specified in paragraph (1)(A)(i) and the 60,000 barrel quantity specified in paragraph (2)(A) shall be apportioned among the brewers who are members of such group in such manner as the Secretary or his delegate shall by regulations prescribe. For purposes of the preceding sentence, the term “controlled group” has the meaning assigned to it by subsection (a) of section 1563, except that for such purposes the phrase “more than 50 percent” shall be substituted for the phrase “at least 80 percent” in each place it appears in such subsection. Under regulations prescribed by the Secretary or his delegate, principles similar to the principles of the preceding two sentences shall be applied to a group of brewers under common control where one or more of the brewers is not a corporation.

“(B) Foreign manufacturers and importers—For purposes of paragraph (4), in the case of a controlled group, the 6,000,000 barrel quantity specified in paragraph (1)(A)(i) shall be applied to the controlled group and apportioned among the members of such group in such manner as the Secretary or his delegate shall by regulations prescribe. For purposes of the preceding sentence, the term “controlled group” has the meaning given such term under subparagraph (A). Under regulations prescribed by the Secretary or his delegate, principles similar to the principles of the preceding two sentences shall be applied to a group of brewers under common control where one or more of the brewers is not a corporation.

“(C) Single taxpayer—Pursuant to rules issued by the Secretary, two or more entities (whether or not under common control) that produce beer marketed under a similar brand, license, franchise, or other arrangement shall be treated as a single taxpayer for purposes of the application of this subsection.”

(e)

Effective date—

(1)

In general— Subject to paragraph (2), the amendments made by this section shall apply to beer removed after September 30, 2019.

(2)

Proration— For purposes of the fourth calendar quarter of 2019, the Secretary of the Treasury (or the Secretary's delegate) shall issue such guidance, rules, or regulations as are deemed appropriate to provide that the amendments made by this section are applied on a prorated basis for purposes of beer removed during such quarter.

Sec. 202 Use of wholesome products suitable for human food consumption in the production of fermented beverages

(a)

In general— Not later than the date that is 1 year after the date of the enactment of this Act, the Secretary of the Treasury or the Secretary of the Treasury's delegate shall amend subpart F of part 25 of subchapter A of chapter I of title 27, Code of Federal Regulations, to ensure that, for purposes of such part, wholesome fruits, vegetables, and spices suitable for human food consumption that are generally recognized as safe for use in an alcoholic beverage and that do not contain alcohol are generally recognized as a traditional ingredient in the production of fermented beverages.

(b)

Definition— For purposes of this section, the term fruit means whole fruit, fruit juices, fruit puree, fruit extract, or fruit concentrate.

(c)

Rule of construction— Nothing in this section shall be construed to revoke, prescribe, or limit any other exemptions from the formula requirements under subpart F of part 25 of subchapter A of chapter I of title 27, Code of Federal Regulations, for any ingredient that has been recognized before, on, or after the date of the enactment of this Act as a traditional ingredient in the production of fermented beverages.

Sec. 203 Simplification of rules regarding records, statements, and returns

(a)

In general— Subsection (a) of section 5555 of the Internal Revenue Code of 1986 is amended by adding at the end the following: “The Secretary shall permit a person to employ a unified system for any records, statements, and returns required to be kept, rendered, or made under this section for any beer produced in the brewery for which the tax imposed by section 5051 has been determined, including any beer which has been removed for consumption on the premises of the brewery.”.

(b)

Effective date— The amendments made by this section shall apply to any calendar quarters beginning more than 1 year after the date of the enactment of this Act.

Sec. 204 Transfer of beer between bonded facilities

(a)

In general— Section 5414 of the Internal Revenue Code of 1986 is amended to read as follows:

“5414. Transfer of beer between bonded facilities

“(a) In general—Beer may be removed from one brewery to another bonded brewery, without payment of tax, and may be mingled with beer at the receiving brewery, subject to such conditions, including payment of the tax, and in such containers, as the Secretary by regulations shall prescribe, which shall include—

“(1) any removal from one brewery to another brewery belonging to the same brewer,

“(2) any removal from a brewery owned by one corporation to a brewery owned by another corporation when—

“(A) one such corporation owns the controlling interest in the other such corporation, or

“(B) the controlling interest in each such corporation is owned by the same person or persons, and

“(3) any removal from one brewery to another brewery when—

“(A) the proprietors of transferring and receiving premises are independent of each other and neither has a proprietary interest, directly or indirectly, in the business of the other, and

“(B) the transferor has divested itself of all interest in the beer so transferred and the transferee has accepted responsibility for payment of the tax.

“(b) Transfer of liability for tax—For purposes of subsection (a)(3), such relief from liability shall be effective from the time of removal from the transferor's bonded premises, or from the time of divestment of interest, whichever is later.”

(b)

Removal from brewery by pipeline— Section 5412 of the Internal Revenue Code of 1986 is amended by inserting “pursuant to section 5414 or” before “by pipeline”.

(c)