WASHINGTON, DC–WineAmerica is delighted that wineries throughout the country will now be able to take full advantage of reduced federal excise taxes due to an announcement by the federal Alcohol and Tobacco Tax and Trade Bureau (TTB) that it is extending an “alternate procedure” through December 31, 2019.
“This ruling now ensures that the Congressional intent of the Craft Beverage Modernization and Tax Reform Act (CMBTRA) will be fulfilled by allowing all wineries to benefit, and also allows more time to seek additional changes to enhance the law’s full potential,” said WineAmerica President Jim Trezise. “We are grateful to our staff, lobbyists, Congressional supporters, and the TTB for this positive development.”
WineAmerica, the National Association of American Wineries, worked on the CBMTRA for three years leading up to its passage last December as part of the broader Tax Cuts and Jobs Act, which went into effect January 1, 2018. The law reduced federal excise taxes on wine through a system of tax credits and other means, giving winery owners new capital to invest in their businesses.
However, during the legislative process some changes in language occurred which TTB then interpreted as allowing the tax cuts to apply only to wines fully controlled by the producer from production to storage and final sale. This would nullify the benefits for the many wineries which use “custom crush” arrangements or store their wines offsite at bonded wine cellars, causing enormous financial hardship.
WineAmerica Vice President Michael Kaiser, accompanied by Larry Meyers and Fran Boyd of Meyers & Associates, immediately got back to work after TTB’s March 2 guidelines created an “alternate procedure” which would allow all wineries to take advantage of the tax credits only until June 30, 2018. After that, those involved with custom crush or bonded wine cellars would have to pay the full excise tax rate, a 15-fold increase for many.
WineAmerica began working on this issue immediately in early March, and while there has been much activity and many meetings with both Republican and Democrat House and Senate members, two key meetings occurred on Thursday, May 10 with Oregon Senators Jeff Merkley and Ron Wyden. Their constituent, Janie Brooks Heuck, co-owner of Brooks Wines in the Willamette Valley as well as Vice Chair of the WineAmerica Board, met with both Senators in Washington, DC and explained how the TTB’s initial guidelines would significantly affect her winery and hundreds like it nationwide. Two days earlier, Jana McKamey of the Oregon Winegrowers Association had also spoken with the staff of her Senators.
Immediately after the Thursday morning meeting, Janie was contacted by her Senator’s staff letting her know that TTB officials had agreed to extend the guidelines until the end of next year. This continues a pattern of Oregon winery principals, trade associations, and legislators playing leadership roles, starting when Senator Wyden actually initiated the CBMTRA three years ago. It’s also a classic example of the power of national grassroots public policy advocacy through WineAmerica’s coordination of individual wineries, state trade associations, and the national association.
Senators Roy Blunt (R- Missouri) and Rob Portman from (R-Ohio) also played key roles both in the inclusion of the CBMTRA in the broader Tax Cuts and Jobs Act, and in clarifying Congressional intent that all American wines were intended to benefit from the tax credits. Their respective states both have robust and growing wine industries, and their leadership on this issue is helping the entire American wine industry. The fact that leading Senators from both parties worked on our behalf to fix this problem illustrates the bipartisan appeal of the CMBTRA and the wine industry in general.
“We are very fortunate to have such strong bipartisan support from our public officials, as well as the dedicated staff at WineAmerica and our lobbying team,” said Janie Brooks Heuck. “Because WineAmerica has winery members from 42 states, we have broad reach in Congress when issues like this arise.”
Still, there is more work to be done on this issue. While the TTB recent policy decision is very encouraging and a big relief, ultimately a statutory change in the legislation needs to be done. In addition, currently the tax reductions are scheduled to end on December 31, 2019, and WineAmerica will actively seek to make them permanent.
WineAmerica is also grateful for the support of our partners in the alcohol beverage coalition, including Wine Institute, the Distilled Spirits Council, the American Craft Spirits Association, Beer Institute, and the Brewers Association. Our industry coalition was key to passing the CBMTRA in the first place, and the associations in the spirits and beer sectors supported the wine industry on this particular issue even though they themselves were not directly affected. As someone once said, “Diversity is our Strength. Unity is our Power.”