Excise tax and the CBMA reduced rate
Excise is owed on spirits removed from bond tax-paid. On the Floor that is Ship tax-paid on the Bottling tab for cases, and Ship tax-paid (bulk) on a tank. The Reports tab adds up each month's removals for the 5000.24, at the rates below.
The rates
From 26 U.S.C. 5001:
- $13.50 per proof gallon is the standard rate (5001(a)(1)).
- The reduced rates apply to spirits "distilled or processed" by the distilled spirits operation and removed during the calendar year: $2.70 per proof gallon on the first 100,000 proof gallons, then $13.34 on the next 22,130,000 (5001(c)(1)).
- A spirit is not "processed" for this purpose unless a process other than bottling was performed on it (5001(c)(5)).
The tiers count the calendar year's eligible removals at all of your plants. If your company is in a controlled group, the group's tiers are shared among its members (5001(c)(2)). Enter your company's share for each calendar year in Setup → Settings. Once a month of a year is filed, that year's share can't change.
How DISTRYB decides
Every tax-paid removal is priced when it is recorded, from what the lot is at that moment. Later work on related lots never re-prices a month you have filed.
When DISTRYB cannot show that the spirits were distilled or processed here, they pay the full rate.
A lot counts as distilled here when it comes off one of your stills (redistillation included) or from a mash you mashed in.
A lot counts as processed here, whatever its source, bought in bond included, when one of these is done in the processing account:
- a blend of two or more lots;
- a dump of two or more lots into one processing tank;
- Add ingredient (with alcohol);
- Process: filtering, a non-alcoholic flavor, a sweetener or coloring.
These are not treated as processing, so bought-in-bond spirits that only went through them pay the full rate:
- bottling, which 5001(c)(5) excludes by name;
- proofing down, because the records cannot tell water added to reach label proof at bottling from any other water;
- mingling in the storage account;
- entering the processing account (Gauge & enter, Enter processing), or moving a single lot on its own.
These are recorded as bought in bond, and pay the full rate unless they are later processed:
- spirits received in bond from another proprietor;
- a receipt from one of your own plants, or a co-packer return, that does not name the shipment it came from;
- an opening balance answered "bought in bond";
- anything whose source was never recorded.
When you receive spirits from one of your own plants, pick the shipment on the receive card so the spirits keep what they were when they shipped.
Imported spirits
Proof gallons produced outside the U.S. and removed after December 31, 2022 do not take the reduced rate here. Instead, an electing importer that a foreign producer has assigned reduced-rate gallons to may claim a refund (26 U.S.C. 5001(c)(4)). DISTRYB applies this per proof gallon: each lot carries the share of its proof gallons produced abroad, weighted through every blend, and only the domestic share of a removal takes the reduced rate.
- A lot whose origin was never recorded counts as all imported.
- An alcohol-bearing ingredient counts as produced abroad unless you say its alcohol was produced in the U.S.
- Whether a domestic distillery that processes imported bulk spirits can claim the reduced rate on them is not settled in DISTRYB. Ask your counsel.
Reduced-rate proof gallons are rounded down to the tenth, toward the full rate.
What the excise summary shows
The Reports tab shows the proof gallons at the reduced rate, the proof gallons at the full rate, any produced outside the U.S., and any that qualified but fell past the tiers or your group's share. Confirm eligibility lot by lot before you file.
Return periods
Set the excise return period in Setup → Settings (27 CFR 19.235):
- Semimonthly: the 1st to the 15th, and the 16th to the end of the month. Required unless you qualify for, and choose, a quarterly or annual period.
- Quarterly: if you reasonably expect no more than $50,000 in distilled spirits tax this calendar year and owed no more than that last year.
- Annual: the same test at $1,000.
Each return is due by the 14th day after its period ends (27 CFR 19.236); September has its own semimonthly dates, which the Reports tab shows. See Month end and your TTB reports for what the 5000.24 leaves for you to complete.