CSMS# 18-000609 - Procedures & Requirements: Implementing Craft Beverage Modernization & Tax Reform of 2017
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BACKGROUND
Effective January 1, 2018, the Craft Beverage Modernization and Tax Reform Act of 2017 (CBMA) (as contained in Pub. L. No. 115-97) amended the Internal Revenue Code with respect to the tax treatment of certain alcoholic beverages. The provisions of the CBMA are effective during calendar years 2018 and 2019. On June 27, 2018, U.S. Customs and Border Protection (CBP) issued initial guidance on the implementation of CBMA via CSMS message # 18-000403. On August 31, 2018, CBP issued additional guidance on CBMA implementation via CSMS message # 18-000511. On October 3, 2018, CBP issued advance procedures and requirements regarding the implementation of the CBMA via CSMS message # 18-000587.
Under the CBMA, reduced tax rates and/or tax credits are applicable to importations of certain limited quantities of distilled spirits, beer or wine imported from each foreign producer/assigning entity (as described in the CBMA). Further, the assignments of the tax credits or reduced tax rates by the foreign producer/assigning entity to all importers may not exceed the quantities allowed by law. Thus, for an importer to be eligible to receive a reduced tax rate or a tax credit, importers must substantiate that the foreign producer/assigning entity has assigned an allotment of its reduced tax rate or tax credits to the distilled spirits, beer, or wine imported by that importer.
Pursuant to the interim final rule on Refund of Alcohol Excise Tax, 83 Fed. Reg. 40,675 (August 16, 2018), CBP and the Department of Treasury amended 19 CFR 24.36, which authorized CBP to issue refunds owed on entries where the importer received a foreign producer assignment pursuant to the CBMA when appropriate.
On September 1, 2018, CBP deployed in the Automated Commercial Environment (ACE) an entry summary line level flag to identify imported alcohol for which the importer has received a CBMA assignment from the foreign producer/assigning entity. In our August 31, 2018 CSMS message # 18-000511, CBP encouraged importers to use the CBMA entry summary line level flag (CBMA flag) to identify imported alcohol for which the importer had received a CBMA assignment from a foreign producer/assigning entity. CBP advised the trade that the CBMA flag could be transmitted at time of entry summary filing, or subsequently as a Post Summary Correction (PSC) for unliquidated entry summaries.
PROCEDURES AND REQUIREMENTS
This communication serves to revise, effective immediately, previous CBP guidance on CBMA. This communication addresses the foreign assignment aspect of CBMA for 2018 entries. CBP will issue further communication for 2019 entries at a later date.
CBP will also issue at a later date separate procedures and requirements addressing the CBMA’s temporary changes to the tax classification of certain wines, including wines containing more than 14% but not more than 16% alcohol by volume. Importers should not use the CBMA flag to identify entry lines to which such tax classification changes apply. As discussed further below, the CBMA flag should be used to identify entry lines for which the importer has received a CBMA assignment from a foreign producer/assigning entity and for which the CBMA rate is claimed.
Effective immediately, CBP advises importers claiming a reduced tax rate or tax rate incorporating applicable tax credits as permitted by the CBMA (hereinafter “CBMA rate”) to do so at the time of entry summary. In addition, going forward, importers will use the CBMA flag to identify entry lines for which the CBMA rate is claimed and declare the lower tax rate (as opposed to the excise tax rate required prior to the enactment of the CBMA). Importers should ONLY use the CBMA flag when claiming the CBMA rate, whether at the time of entry summary filing or the filing of a PSC.
For entries filed since January 1, 2018 that have not liquidated and for which the importer wants to make a CBMA claim, effective immediately:
A) If not flagged, importers should file a PSC with the CBMA flag and the CBMA rate.
B) If flagged but the CBMA rate has not been claimed, importers should file another PSC with the CBMA rate and the CBMA flag.
For those importers that have liquidated entries for which they would like to claim the CBMA rate, the importer may file a protest. Importers filing protests claiming the CBMA rate should identify “CBMA” in the protest issue dropdown.
For any entries filed since January 1, 2018, for which the low excise tax rate was claimed, importers must complete the CBMA claim by flagging the entry immediately via PSC, and submitting the substantiating documents, as defined below, prior to CBP review and liquidation. PSC is the mechanism for submitting CBMA claims in this situation if within the PSC timeframe.
As will be discussed at length below, importers are required to file documentation to complete their CBMA claim, and the documentation should be filed at the time of entry summary, PSC filing or protest filing. To complete a CBMA claim, importers will be required to submit two Excel spreadsheets (the CBMA Spreadsheet and the Controlled Group Spreadsheet) and an Assignment Certification to CBP. 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. A claim will not be considered complete until the CBMA Spreadsheet, the Controlled Group Spreadsheet, and the Assignment Certification are provided to CBP.
CBP will process and liquidate claims for entries made in calendar year 2018, beginning January 31, 2019. CBP will begin its review with the oldest entry on file with a CBMA claim and work forward chronologically. Any 2018 CBMA claims that are not substantiated with the required documentation by January 31, 2019 are at risk of being liquidated without the benefit of the CBMA rate. If the importer has a complete and valid claim and the assignment limit has not been reached at the time of CBP review, CBP will liquidate the entry and apply the CBMA rate.
The CBMA Spreadsheet includes the following information: Entry Number; Entry Line Number(s); Importer of Record (IOR) Number; Protest Number (if applicable); Alcohol Type; CBMA Tax Rate or Credit Assigned and Requested by Line; Quantity Claimed for CBMA Tax Rate or Credit by Line; Estimated Excise Tax Paid by Line for Quantity Claimed; Excise Tax Claimed to be Owed by Line for Quantity Claimed; Refund; Total Annual Assignment Received from Assigning Entity to Date; Total Annual Assignment Taken to Date; Total Annual Assignment Remaining to Date; FDA Manufacturer Name; Controlled Group Name; Foreign Producer/Assigning Entity Name and Information; Date of Submission for Controlled Group Spreadsheet ; and Date of Submission for Assignment Certification Submitted. Each data field is further described in the template posted on CBP.gov at https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017. Importers will submit the Excel (not .pdf) spreadsheet via the Document Image System (DIS), linked to the entry number. For paper submissions, importers will email the completed Excel (not .pdf) spreadsheet to CBMA@cbp.dhs.gov. A separate CBMA Spreadsheet should be completed for every entry for which the importer asserts a CBMA claim.
The Controlled Group Spreadsheet includes the following information: IOR Number; Controlled Group Name; Controlled Group Member Information; Foreign or Domestic Controlled Group Member; and Annual Production. Each data field is further described in the template posted on CBP.gov at https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017 . Each importer will submit a separate Controlled Group Spreadsheet for each Controlled Group to which the importer belongs. Importers submitting the Controlled Group Spreadsheet should upload the Excel (not .pdf) spreadsheet to DIS, and link to the Importer of Record number. For paper submissions, importers will email the completed Excel (not .pdf) spreadsheet to CBMA@cbp.dhs.gov. While CBP does not require the filing of the Controlled Group Spreadsheet with every entry on which a CBMA claim is made, the relevant Controlled Group Spreadsheet is required to be on file for every entry for which the importer asserts a CBMA claim. In the event that there is a change in the reported Controlled Group or the importer receives an assignment from a new foreign producer/assigning entity, the importer will immediately submit a new Controlled Group Spreadsheet reflecting the updates.
In addition to the Controlled Group Spreadsheet provided by the importer, a foreign producer/assigning entity may provide a Controlled Group Spreadsheet to CBP directly via email to CBMA@cbp.dhs.gov for verification purposes. Controlled Group Spreadsheets submitted by the foreign producer/assigning entity will not require the IOR Number.
The Assignment Certification must be issued on the letterhead of the foreign producer/assigning entity. Further, the Assignment Certification is required to be signed by a duly authorized officer or employee of the foreign producer/assigning entity. Importers will submit the Assignment Certification via DIS, linked to the IOR. While CBP does not require the filing of the Assignment Certification with every entry on which a CBMA claim is made, an Assignment Certification must be on file with CBP that validates the assignment for every entry for which the importer asserts a CBMA claim. In the event that there is a change, such that a new Assignment Certification is required, the importer will immediately submit a new Assignment Certification reflecting the updates. The template for the Assignment Certification is posted to CBP.gov at https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017.
Instructions for providing the CBMA supporting documentation via DIS are included in the ACE DIS Implementation Guide at https://www.cbp.gov/document/technical-documentation/ace-dis-implementation-guide. CBMA documents submitted via DIS may only be provided via DIS email at the present time. The category in the subject line will be CBMA. The CBMA Spreadsheet (referred to as the CBMA Importer Spreadsheet in the DIS Implementation Guide) will be linked to the entry number. The Controlled Group Spreadsheet and Assignment Certification will be linked to the IOR, and a dummy entry number (e.g., 12345678) and filer code (e.g., 123) will be used in the subject line. The document attachments in DIS must be titled as follows:
CBP154-[Controlled_Group_ Name]_Controlled_Group_Spreadsheet.xls
CBP155-CBMA_Spreadsheet.xls
CBP156-[Assigning_Entity_Name]_Assignment_Certification.pdf
The importer will fill in the Controlled Group name and Assigning Entity name as applicable.
If you have any questions or require additional information, please contact CBMA@cbp.dhs.gov. CBP encourages trade members to continue to visit the CBMA page on CBP.gov at https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017.
Related CSMS No. 18-000403, 18-000511, 18-000587
BACKGROUND
Effective January 1, 2018, the Craft Beverage Modernization and Tax Reform Act of 2017 (CBMA) (as contained in Pub. L. No. 115-97) amended the Internal Revenue Code with respect to the tax treatment of certain alcoholic beverages. The provisions of the CBMA are effective during calendar years 2018 and 2019. On June 27, 2018, U.S. Customs and Border Protection (CBP) issued initial guidance on the implementation of CBMA via CSMS message # 18-000403. On August 31, 2018, CBP issued additional guidance on CBMA implementation via CSMS message # 18-000511. On October 3, 2018, CBP issued advance procedures and requirements regarding the implementation of the CBMA via CSMS message # 18-000587.
Under the CBMA, reduced tax rates and/or tax credits are applicable to importations of certain limited quantities of distilled spirits, beer or wine imported from each foreign producer/assigning entity (as described in the CBMA). Further, the assignments of the tax credits or reduced tax rates by the foreign producer/assigning entity to all importers may not exceed the quantities allowed by law. Thus, for an importer to be eligible to receive a reduced tax rate or a tax credit, importers must substantiate that the foreign producer/assigning entity has assigned an allotment of its reduced tax rate or tax credits to the distilled spirits, beer, or wine imported by that importer.
Pursuant to the interim final rule on Refund of Alcohol Excise Tax, 83 Fed. Reg. 40,675 (August 16, 2018), CBP and the Department of Treasury amended 19 CFR 24.36, which authorized CBP to issue refunds owed on entries where the importer received a foreign producer assignment pursuant to the CBMA when appropriate.
On September 1, 2018, CBP deployed in the Automated Commercial Environment (ACE) an entry summary line level flag to identify imported alcohol for which the importer has received a CBMA assignment from the foreign producer/assigning entity. In our August 31, 2018 CSMS message # 18-000511, CBP encouraged importers to use the CBMA entry summary line level flag (CBMA flag) to identify imported alcohol for which the importer had received a CBMA assignment from a foreign producer/assigning entity. CBP advised the trade that the CBMA flag could be transmitted at time of entry summary filing, or subsequently as a Post Summary Correction (PSC) for unliquidated entry summaries.
PROCEDURES AND REQUIREMENTS
This communication serves to revise, effective immediately, previous CBP guidance on CBMA. This communication addresses the foreign assignment aspect of CBMA for 2018 entries. CBP will issue further communication for 2019 entries at a later date.
CBP will also issue at a later date separate procedures and requirements addressing the CBMA’s temporary changes to the tax classification of certain wines, including wines containing more than 14% but not more than 16% alcohol by volume. Importers should not use the CBMA flag to identify entry lines to which such tax classification changes apply. As discussed further below, the CBMA flag should be used to identify entry lines for which the importer has received a CBMA assignment from a foreign producer/assigning entity and for which the CBMA rate is claimed.
Effective immediately, CBP advises importers claiming a reduced tax rate or tax rate incorporating applicable tax credits as permitted by the CBMA (hereinafter “CBMA rate”) to do so at the time of entry summary. In addition, going forward, importers will use the CBMA flag to identify entry lines for which the CBMA rate is claimed and declare the lower tax rate (as opposed to the excise tax rate required prior to the enactment of the CBMA). Importers should ONLY use the CBMA flag when claiming the CBMA rate, whether at the time of entry summary filing or the filing of a PSC.
For entries filed since January 1, 2018 that have not liquidated and for which the importer wants to make a CBMA claim, effective immediately:
A) If not flagged, importers should file a PSC with the CBMA flag and the CBMA rate.
B) If flagged but the CBMA rate has not been claimed, importers should file another PSC with the CBMA rate and the CBMA flag.
For those importers that have liquidated entries for which they would like to claim the CBMA rate, the importer may file a protest. Importers filing protests claiming the CBMA rate should identify “CBMA” in the protest issue dropdown.
For any entries filed since January 1, 2018, for which the low excise tax rate was claimed, importers must complete the CBMA claim by flagging the entry immediately via PSC, and submitting the substantiating documents, as defined below, prior to CBP review and liquidation. PSC is the mechanism for submitting CBMA claims in this situation if within the PSC timeframe.
As will be discussed at length below, importers are required to file documentation to complete their CBMA claim, and the documentation should be filed at the time of entry summary, PSC filing or protest filing. To complete a CBMA claim, importers will be required to submit two Excel spreadsheets (the CBMA Spreadsheet and the Controlled Group Spreadsheet) and an Assignment Certification to CBP. 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. A claim will not be considered complete until the CBMA Spreadsheet, the Controlled Group Spreadsheet, and the Assignment Certification are provided to CBP.
CBP will process and liquidate claims for entries made in calendar year 2018, beginning January 31, 2019. CBP will begin its review with the oldest entry on file with a CBMA claim and work forward chronologically. Any 2018 CBMA claims that are not substantiated with the required documentation by January 31, 2019 are at risk of being liquidated without the benefit of the CBMA rate. If the importer has a complete and valid claim and the assignment limit has not been reached at the time of CBP review, CBP will liquidate the entry and apply the CBMA rate.
The CBMA Spreadsheet includes the following information: Entry Number; Entry Line Number(s); Importer of Record (IOR) Number; Protest Number (if applicable); Alcohol Type; CBMA Tax Rate or Credit Assigned and Requested by Line; Quantity Claimed for CBMA Tax Rate or Credit by Line; Estimated Excise Tax Paid by Line for Quantity Claimed; Excise Tax Claimed to be Owed by Line for Quantity Claimed; Refund; Total Annual Assignment Received from Assigning Entity to Date; Total Annual Assignment Taken to Date; Total Annual Assignment Remaining to Date; FDA Manufacturer Name; Controlled Group Name; Foreign Producer/Assigning Entity Name and Information; Date of Submission for Controlled Group Spreadsheet ; and Date of Submission for Assignment Certification Submitted. Each data field is further described in the template posted on CBP.gov at https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017. Importers will submit the Excel (not .pdf) spreadsheet via the Document Image System (DIS), linked to the entry number. For paper submissions, importers will email the completed Excel (not .pdf) spreadsheet to CBMA@cbp.dhs.gov. A separate CBMA Spreadsheet should be completed for every entry for which the importer asserts a CBMA claim.
The Controlled Group Spreadsheet includes the following information: IOR Number; Controlled Group Name; Controlled Group Member Information; Foreign or Domestic Controlled Group Member; and Annual Production. Each data field is further described in the template posted on CBP.gov at https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017 . Each importer will submit a separate Controlled Group Spreadsheet for each Controlled Group to which the importer belongs. Importers submitting the Controlled Group Spreadsheet should upload the Excel (not .pdf) spreadsheet to DIS, and link to the Importer of Record number. For paper submissions, importers will email the completed Excel (not .pdf) spreadsheet to CBMA@cbp.dhs.gov. While CBP does not require the filing of the Controlled Group Spreadsheet with every entry on which a CBMA claim is made, the relevant Controlled Group Spreadsheet is required to be on file for every entry for which the importer asserts a CBMA claim. In the event that there is a change in the reported Controlled Group or the importer receives an assignment from a new foreign producer/assigning entity, the importer will immediately submit a new Controlled Group Spreadsheet reflecting the updates.
In addition to the Controlled Group Spreadsheet provided by the importer, a foreign producer/assigning entity may provide a Controlled Group Spreadsheet to CBP directly via email to CBMA@cbp.dhs.gov for verification purposes. Controlled Group Spreadsheets submitted by the foreign producer/assigning entity will not require the IOR Number.
The Assignment Certification must be issued on the letterhead of the foreign producer/assigning entity. Further, the Assignment Certification is required to be signed by a duly authorized officer or employee of the foreign producer/assigning entity. Importers will submit the Assignment Certification via DIS, linked to the IOR. While CBP does not require the filing of the Assignment Certification with every entry on which a CBMA claim is made, an Assignment Certification must be on file with CBP that validates the assignment for every entry for which the importer asserts a CBMA claim. In the event that there is a change, such that a new Assignment Certification is required, the importer will immediately submit a new Assignment Certification reflecting the updates. The template for the Assignment Certification is posted to CBP.gov at https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017.
Instructions for providing the CBMA supporting documentation via DIS are included in the ACE DIS Implementation Guide at https://www.cbp.gov/document/technical-documentation/ace-dis-implementation-guide. CBMA documents submitted via DIS may only be provided via DIS email at the present time. The category in the subject line will be CBMA. The CBMA Spreadsheet (referred to as the CBMA Importer Spreadsheet in the DIS Implementation Guide) will be linked to the entry number. The Controlled Group Spreadsheet and Assignment Certification will be linked to the IOR, and a dummy entry number (e.g., 12345678) and filer code (e.g., 123) will be used in the subject line. The document attachments in DIS must be titled as follows:
CBP154-[Controlled_Group_ Name]_Controlled_Group_Spreadsheet.xls
CBP155-CBMA_Spreadsheet.xls
CBP156-[Assigning_Entity_Name]_Assignment_Certification.pdf
The importer will fill in the Controlled Group name and Assigning Entity name as applicable.
If you have any questions or require additional information, please contact CBMA@cbp.dhs.gov. CBP encourages trade members to continue to visit the CBMA page on CBP.gov at https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017.
Related CSMS No. 18-000403, 18-000511, 18-000587
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