Implementation of the Craft Beverage Modernization Act

The moment we’ve all been waiting for is around the corner!

As previously advised by the Craft Beverage Modernization Act (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 allocations 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. 

In mid-October 2018, CBP will advise importers to claim–at the time of entry summary–the reduced tax rate or standard tax rate, incorporating applicable tax credits as permitted by the CBMA for which the importer has received a CBMA allocation from a foreign producer/assigning entity. Thus, going forward from that mid-October 2018 Customs message, on behalf of importers, brokers will use the CBMA flag to identify entry lines for which the CBMA rate will be claimed and declare the lower tax rate (as opposed to the excise tax rate required prior to the enactment of the CBMA).  At that time, brokers, on behalf of importers, have been told to ONLY use the CBMA flag when claiming the CBMA rate, whether at the time of entry summary filing or the filing of a PSC. 

The instruction further states that, for entries filed since January 2018 with CBMA claims that have not liquidated (effective with the mid-October 2018 Customs message), brokers, on behalf of importers, should file a PSC with the CBMA flag, at the CBMA rate, with the accompanying required CBMA documentation. 

Importers will be required to file documentation (via their broker) to complete their CBMA claim; this 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. A claim will not be considered complete until the CBMA Spreadsheet, the Controlled Group Spreadsheet and the Assignment Certification are provided to CBP.  The templates for these spreadsheets, along with further guidance, should be available in mid-October as well.

Shapiro will keep you informed of any developments and will certainly communicate further instructions once CBP has issued their “mid-October” message advising the trade the CBMA flag is active.  In the interim, if you have any questions, please don’t hesitate to reach out to us at compliance@shapiro.com.