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Tax Simplification

August 29, 2025

Distilled Spirits Tax FAQ: What Domestic Activities Constitute 'Processing' When Determining Eligibility for Reduced Distilled Spirits Tax Rates?

Reduced tax rates are allowed on distilled spirits that are distilled or processed by a domestic distilled spirits plant (DSP) and removed by a DSP during the calendar year. A domestic DSP is considered a processor of distilled spirits if it “manufactures, mixes, or otherwise processes distilled spirits” or “manufactures any article.” See 26 U.S.C. 5002(a)(5)(A). “The term ‘processor’ includes (but is not limited to) a rectifier, bottler, or denaturer.” See 26 U.S.C. 5002(a)(5)(B). For distilled spirits removed after December 31, 2021, “[a] distilled spirit shall not be treated as processed [for reduced rate purposes] unless a process described in [26 U.S.C. 5002(a)(5)(A)] (other than bottling) is performed with respect to such distilled spirit.” See 26 U.S.C. 5001(c)(5).

For purposes of the reduced rates, a domestic DSP is considered a processor of distilled spirits if it:

• manufactures distilled spirits,
• mixes distilled spirits with materials including flavors, wines, water (except that the addition of water during the normal process of bottling for the purpose of ensuring label proof does not constitute “processing” for reduced rate purposes), or other distilled spirits of any type, and/or
• otherwise physically changes the distilled spirits inside the container, including filtering distilled spirits to remove material from those distilled spirits.

Processing does not include changing the marks or labels on distilled spirits containers or repacking containers of distilled spirits without physically changing the distilled spirits inside the containers.

Note: Eligibility for the reduced tax rates or new tax credits may be limited by application of the single taxpayer or controlled group rules.

TTB Issues Permit Suspension

We have issued a permit suspension to Apologue, LLC for willfully violating the conditions of its DSP Basic Permit.

For detailed information regarding this and other suspensions, please visit our Administrative Actions page.

Food and Drug Administration Notices

TTB-regulated industries may find these notices of interest.

Agency Information Collection Activities; Proposed Collection; Comment Request; Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco to Protect Children and Adolescents

SOURCE: Federal Register / Vol. 90, No. 161 / Friday, August 22, 2025

AGENCY: Food and Drug Administration, HHS

ACTION: Notice

SUMMARY: The Food and Drug Administration (FDA or Agency) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (PRA), Federal Agencies are required to publish notice in the Federal Register concerning each proposed collection of information, including each proposed extension of an existing collection of information, and to allow 60 days for public comment in response to the notice. This notice solicits comments on the collection of information entitled, “Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco to Protect Children and Adolescents.’’

DATES: Either electronic or written comments on the collection of information must be submitted by October 21, 2025.

Agency Information Collection Activities; Proposed Collection; Comment Request; Tobacco Retailer Training Programs

SOURCE: Federal Register / Vol. 90, No. 161 / Friday, August 22, 2025

AGENCY: Food and Drug Administration, HHS

ACTION: Notice

SUMMARY: The Food and Drug Administration (FDA or Agency) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (PRA), Federal Agencies are required to publish notice in the Federal Register concerning each proposed collection of information, including each proposed extension of an existing collection of information, and to allow 60 days for public comment in response to the notice. This notice solicits comments on the information collection provisions associated with ‘‘Tobacco Retailer Training Programs.’’

DATES: Either electronic or written comments on the collection of information must be submitted by October 21, 2025.

U.S. Customs and Border Protection: Commercial Customs Operations Advisory Committee

TTB-regulated industries may find this notice of interest.

SOURCE: Federal Register / Vol. 90, No. 162 / Monday, August 25, 2025

AGENCY: U.S. Customs and Border Protection, Department of Homeland Security

ACTION: Notice of Open Federal Advisory Committee Meeting

SUMMARY: The Commercial Customs Operations Advisory Committee (Committee) will hold its quarterly meeting on Wednesday, September 17, 2025, in Washington, DC. The meeting will be open to the public via webinar only.

DATES: The Committee will meet on Wednesday, September 17, 2025, from 1:00 p.m. to 5:00 p.m. Eastern Daylight Time. Please note the meeting may close early if the Committee has completed its business. Comments must be submitted in writing no later than 5:00 p.m. Eastern Daylight Time on September 12, 2025.

What's Trending on TTB.gov: Business Central

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Upcoming TTB Outreach Activities

• September 14-16: NCSLA Northern/Southern Regional Conference
• September 29-30: CLE International Wine, Beer and Spirits Law

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