[Congressional Record Volume 162, Number 53 (Thursday, April 7, 2016)]
[Senate]
[Pages S1824-S1827]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 3539. Mr. BLUNT (for himself, Mr. Wyden, Mr. Bennet, Mr. Portman,
Ms. Baldwin, Mr. Vitter, Ms. Murkowski, Mrs. Murray, Mr. Burr, Ms.
Ayotte, Mr. Carper, and Mr. Moran) submitted an amendment intended to
be proposed to amendment SA 3464 submitted by Mr. Thune (for himself
and Mr. Nelson) to the bill H.R. 636, to amend the Internal Revenue
Code of 1986 to permanently extend increased expensing limitations, and
for other purposes; which was ordered to lie on the table; as follows:
At the end, insert the following:
TITLE VI--CRAFT BEVERAGE MODERNIZATION AND TAX REFORM
SEC. 6001. SHORT TITLE; RULE OF CONSTRUCTION.
(a) Short Title.--This title may be cited as the ``Craft
Beverage Modernization and Tax Reform Act of 2016''.
(b) Rule of Construction.--Nothing in this title, the
amendments made by this title, or any regulation promulgated
under this title or the amendments made by this title, shall
be construed to preempt, supersede, or otherwise limit or
restrict any State, local, or tribal law that prohibits or
regulates the production or sale of distilled spirits, wine,
or malt beverages.
[[Page S1825]]
Subtitle A--Production Period
SEC. 6011. PRODUCTION PERIOD FOR BEER, WINE, AND DISTILLED
SPIRITS.
(a) In General.--Section 263A(f) of the Internal Revenue
Code of 1986 is amended--
(1) by redesignating paragraph (4) as paragraph (5), and
(2) by inserting after paragraph (3) the following new
paragraph:
``(4) Exemption for aging process of beer, wine, and
distilled spirits.--For purposes of this subsection, the
production period shall not include the aging period for--
``(A) beer (as defined in section 5052(a)),
``(B) wine (as described in section 5041(a)), or
``(C) distilled spirits (as defined in section 5002(a)(8)),
except such spirits that are unfit for use for beverage
purposes.''.
(b) Conforming Amendment.--Paragraph (5)(B)(ii) of section
263A(f) of the Internal Revenue Code of 1986, as redesignated
by this section, is amended by inserting ``except as provided
in paragraph (4),'' before ``ending on the date''.
(c) Effective Date.--The amendments made by this section
shall apply to interest costs paid or incurred in taxable
years ending on or after December 31, 2017.
Subtitle B--Beer
SEC. 6021. REDUCED RATE OF EXCISE TAX ON BEER.
(a) In General.--Paragraph (1) of section 5051(a) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(1) In general.--
``(A) Imposition of tax.--A tax is hereby imposed on all
beer brewed or produced, and removed for consumption or sale,
within the United States, or imported into the United States.
Except as provided in paragraph (2), the rate of such tax
shall be--
``(i) $16 on the first 6,000,000 barrels of beer brewed by
the brewer or imported by the importer which are removed
during the calendar year for consumption or sale by such
brewer or imported into the United States in such year by
such importer, and
``(ii) $18 on any barrels of beer to which clause (i) does
not apply.
``(B) Barrel.--For purposes of this section, a barrel shall
contain not more than 31 gallons of beer, and any tax imposed
under this section shall be applied at a like rate for any
other quantity or for fractional parts of a barrel.''.
(b) Reduced Rate for Certain Domestic Production.--
Subparagraph (A) of section 5051(a)(2) of the Internal
Revenue Code of 1986 is amended--
(1) in the heading, by striking ``$7'' and inserting
``$3.50'', and
(2) by striking ``$7'' and inserting ``$3.50''.
(c) Application of Reduced Tax Rate for Foreign
Manufacturers and Importers.--Subsection (a) of section 5051
of the Internal Revenue Code of 1986 is amended--
(1) in subparagraph (A)(i) of paragraph (1), as amended by
subsection (a) of this section, by inserting ``and assigned
to such electing importer pursuant to paragraph (4)'' after
``by such importer'', and
(2) by adding at the end the following new paragraph:
``(4) Reduced tax rate for foreign manufacturers and
importers.--
``(A) In general.--In the case of any barrels of beer which
have been brewed or produced outside of the United States and
imported into the United States, the rate of tax applicable
under clause (i) of paragraph (1)(A) (referred to in this
paragraph as the `reduced tax rate') may be assigned by the
brewer (provided that the brewer makes an election described
in subparagraph (B)(ii)) to any electing importer of such
barrels pursuant to the requirements established by the
Secretary of the Treasury under subparagraph (B).
``(B) Assignment.--The Secretary of the Treasury, in
consultation with the Secretary of Health and Human Services
and the Secretary of the Department of Homeland Security,
shall, through such rules, regulations, and procedures as are
determined appropriate, establish procedures for assignment
of the reduced tax rate provided under this paragraph, which
shall include--
``(i) a limitation to ensure that the number of barrels of
beer for which the reduced tax rate has been assigned by a
brewer to any importer does not exceed the number of barrels
of beer brewed or produced by such brewer during the calendar
year which were imported into the United States by such
importer,
``(ii) procedures that allow the election of a brewer to
assign and an importer to receive the reduced tax rate
provided under this paragraph,
``(iii) requirements that the brewer provide any
information as the Secretary determines necessary and
appropriate for purposes of carrying out this paragraph, and
``(iv) procedures that allow for revocation of eligibility
of the brewer and the importer for the reduced tax rate
provided under this paragraph in the case of any erroneous or
fraudulent information provided under clause (iii) which the
Secretary deems to be material to qualifying for such reduced
rate.
``(C) Controlled group.--For purposes of this section, any
importer making an election described in subparagraph (B)(ii)
shall be deemed to be a member of the controlled group of the
brewer, as described under paragraph (5).''.
(d) Controlled Group and Single Taxpayer Rules.--Subsection
(a) of section 5051 of the Internal Revenue Code of 1986, as
amended by this section, is amended--
(1) in paragraph (2)--
(A) by striking subparagraph (B), and
(B) by redesignating subparagraph (C) as subparagraph (B),
and
(2) by adding at the end the following new paragraph:
``(5) Controlled group and single taxpayer rules.--
``(A) In general.--Except as provided in subparagraph (B),
in the case of a controlled group, the 6,000,000 barrel
quantity specified in paragraph (1)(A)(i) and the 2,000,000
barrel quantity specified in paragraph (2)(A) shall be
applied to the controlled group, and the 6,000,000 barrel
quantity specified in paragraph (1)(A)(i) and the 60,000
barrel quantity specified in paragraph (2)(A) shall be
apportioned among the brewers who are component members of
such group in such manner as the Secretary or his delegate
shall by regulations prescribe. For purposes of the preceding
sentence, the term `controlled group' has the meaning
assigned to it by subsection (a) of section 1563, except that
for such purposes the phrase `more than 50 percent' shall be
substituted for the phrase `at least 80 percent' in each
place it appears in such subsection. Under regulations
prescribed by the Secretary or his delegate, principles
similar to the principles of the preceding two sentences
shall be applied to a group of brewers under common control
where one or more of the brewers is not a corporation.
``(B) Foreign manufacturers and importers.--For purposes of
paragraph (4), in the case of a controlled group, the
6,000,000 barrel quantity specified in paragraph (1)(A)(i)
shall be applied to the controlled group and apportioned
among the members of such group in such manner as the
Secretary or his delegate shall by regulations prescribe. For
purposes of the preceding sentence, the term `controlled
group' has the meaning given such term under subparagraph
(A). Under regulations prescribed by the Secretary or his
delegate, principles similar to the principles of the
preceding two sentences shall be applied to a group of
brewers under common control where one or more of the brewers
is not a corporation.
``(C) Single taxpayer.--Pursuant to rules issued by the
Secretary, 2 or more entities (whether or not under common
control) that produce beer marketed under a similar brand,
license, franchise, or other arrangement shall be treated as
a single taxpayer for purposes of the application of this
subsection.''.
(e) Effective Date.--
(1) In general.--Subject to paragraph (2), the amendments
made by this section shall apply to beer removed after
September 30, 2018.
(2) Proration.--For purposes of the fourth calendar quarter
of 2018, the Secretary of the Treasury (or the Secretary's
delegate) shall issue such guidance, rules, or regulations as
are deemed appropriate to provide that the amendments made by
this section are applied on a prorated basis for purposes of
beer removed during such quarter.
SEC. 6022. USE OF WHOLESOME PRODUCTS SUITABLE FOR HUMAN FOOD
CONSUMPTION IN THE PRODUCTION OF FERMENTED
BEVERAGES.
(a) In General.--Not later than the date that is 1 year
after the date of the enactment of this Act, the Secretary of
the Treasury or the Secretary of the Treasury's delegate
shall amend subpart F of part 25 of subchapter A of chapter I
of title 27, Code of Federal Regulations to ensure that, for
purposes of such part, wholesome fruits, vegetables, and
spices suitable for human food consumption that are generally
recognized as safe for use in an alcoholic beverage and that
do not contain alcohol are generally recognized as a
traditional ingredient in the production of fermented
beverages.
(b) Definition.--For purposes of this section, the term
``fruit'' means whole fruit, fruit juices, fruit puree, fruit
extract, or fruit concentrate.
(c) Rule of Construction.--Nothing in this section shall be
construed to revoke, prescribe, or limit any other exemptions
from the formula requirements under subpart F of part 25 of
subchapter A of chapter I of title 27, Code of Federal
Regulations for any ingredient that has been recognized
before, on, or after the date of the enactment of this Act as
a traditional ingredient in the production of fermented
beverages.
SEC. 6023. SIMPLIFICATION OF RULES REGARDING RECORDS,
STATEMENTS, AND RETURNS.
(a) In General.--Subsection (a) of section 5555 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following: ``The Secretary shall permit a person to
employ a unified system for any records, statements, and
returns required to be kept, rendered, or made under this
section for any beer produced in the brewery for which the
tax imposed by section 5051 has been determined, including
any beer which has been removed for consumption on the
premises of the brewery.''.
(b) Effective Date.--The amendments made by this section
shall apply to any calendar quarters beginning more than 1
year after the date of the enactment of this Act.
SEC. 6024. TRANSFER OF BEER BETWEEN BONDED FACILITIES.
(a) In General.--Section 5414 of the Internal Revenue Code
of 1986 is amended to read as follows:
``SEC. 5414. TRANSFER OF BEER BETWEEN BONDED FACILITIES.
``(a) In General.--Beer may be removed from one brewery to
another bonded brewery, without payment of tax, and may be
[[Page S1826]]
mingled with beer at the receiving brewery, subject to such
conditions, including payment of the tax, and in such
containers, as the Secretary by regulations shall prescribe,
which shall include--
``(1) any removal from one brewery to another brewery
belonging to the same brewer,
``(2) any removal from a brewery owned by one corporation
to a brewery owned by another corporation when--
``(A) one such corporation owns the controlling interest in
the other such corporation, or
``(B) the controlling interest in each such corporation is
owned by the same person or persons, and
``(3) any removal from one brewery to another brewery
when--
``(A) the proprietors of transferring and receiving
premises are independent of each other and neither has a
proprietary interest, directly or indirectly, in the business
of the other, and
``(B) the transferor has divested itself of all interest in
the beer so transferred and the transferee has accepted
responsibility for payment of the tax.
``(b) Transfer of Liability for Tax.--For purposes of
subsection (a)(3), such relief from liability shall be
effective from the time of removal from the transferor's
bonded premises, or from the time of divestment of interest,
whichever is later.''.
(b) Removal From Brewery by Pipeline.--Section 5412 of the
Internal Revenue Code of 1986 is amended by inserting
``pursuant to section 5414 or'' before ``by pipeline''.
(c) Effective Date.--The amendments made by this section
shall apply to any calendar quarters beginning more than 1
year after the date of the enactment of this Act.
Subtitle C--Wine
SEC. 6031. REDUCED RATE OF EXCISE TAX ON CERTAIN WINE.
(a) In General.--Section 5041(c) of the Internal Revenue
Code of 1986 is amended--
(1) in the heading, by striking ``for Small Domestic
Producers'',
(2) by amending paragraph (1) to read as follows:
``(1) Allowance of credit.--
``(A) In general.--There shall be allowed as a credit
against any tax imposed by this title (other than chapters 2,
21, and 22) an amount equal to the sum of--
``(i) $1 per wine gallon on the first 30,000 wine gallons
of wine, plus
``(ii) 90 cents per wine gallon on the first 100,000 wine
gallons of wine to which clause (i) does not apply, plus
``(iii) 53.5 cents per wine gallon on the first 620,000
wine gallons of wine to which clauses (i) and (ii) do not
apply,
on wine gallons produced by the producer or imported by the
importer which are removed during the calendar year for
consumption or sale by such producer or imported into the
United States in such year by such importer.
``(B) Adjustment of credit for hard cider.--In the case of
wine described in subsection (b)(6), subparagraph (A) of this
paragraph shall be applied--
``(i) in clause (i) of such subparagraph, by substituting
`6.2 cents' for `$1',
``(ii) in clause (ii) of such subparagraph, by substituting
`5.6 cents' for `90 cents', and
``(iii) in clause (iii) of such subparagraph, by
substituting `3.3 cents' for `53.5 cents'.'',
(3) by striking paragraph (2),
(4) by redesignating paragraphs (3) through (7) as
paragraphs (2) through (6), respectively, and
(5) by amending paragraph (6), as redesignated by paragraph
(4) of this subsection, to read as follows:
``(6) Regulations.--The Secretary may prescribe such
regulations as may be necessary to carry out the purposes of
this subsection, including regulations to ensure proper
calculation of the credit provided in this subsection.''.
(b) Controlled Group and Single Taxpayer Rules.--Paragraph
(3) of section 5041(c), as redesignated by subsection (a)(4),
is amended by striking ``section 5051(a)(2)(B)'' and
inserting ``section 5051(a)(5)''.
(c) Allowance of Credit for Foreign Manufacturers and
Importers.--Subsection (c) of section 5041 of the Internal
Revenue Code of 1986, as amended by subsection (a), is
amended--
(1) in subparagraph (A) of paragraph (1), by inserting
``and assigned to such electing importer pursuant to
paragraph (6)'' after ``by such importer'',
(2) by redesignating paragraph (6) as paragraph (7), and
(3) by inserting after paragraph (5) the following new
paragraph:
``(6) Allowance of credit for foreign manufacturers and
importers.--
``(A) In general.--In the case of any wine gallons of wine
which have been produced outside of the United States and
imported into the United States, the credit allowable under
paragraph (1) (referred to in this paragraph as the `tax
credit') may be assigned by the person who produced such wine
(referred to in this paragraph as the `foreign producer'),
provided that such person makes an election described in
subparagraph (B)(ii), to any electing importer of such wine
gallons pursuant to the requirements established by the
Secretary of the Treasury under subparagraph (B).
``(B) Assignment.--The Secretary of the Treasury, in
consultation with the Secretary of Health and Human Services
and the Secretary of the Department of Homeland Security,
shall, through such rules, regulations, and procedures as are
determined appropriate, establish procedures for assignment
of the tax credit provided under this paragraph, which shall
include--
``(i) a limitation to ensure that the number of wine
gallons of wine for which the tax credit has been assigned by
a foreign producer to any importer does not exceed the number
of wine gallons of wine produced by such foreign producer
during the calendar year which were imported into the United
States by such importer,
``(ii) procedures that allow the election of a foreign
producer to assign and an importer to receive the tax credit
provided under this paragraph,
``(iii) requirements that the foreign producer provide any
information as the Secretary determines necessary and
appropriate for purposes of carrying out this paragraph, and
``(iv) procedures that allow for revocation of eligibility
of the foreign producer and the importer for the tax credit
provided under this paragraph in the case of any erroneous or
fraudulent information provided under clause (iii) which the
Secretary deems to be material to qualifying for such credit.
``(C) Controlled group.--For purposes of this section, any
importer making an election described in subparagraph (B)(ii)
shall be deemed to be a member of the controlled group of the
foreign producer, as described under paragraph (3).''.
(d) Effective Date.--
(1) In general.--Subject to paragraph (2), the amendments
made by this section shall apply to wine removed after
September 30, 2018.
(2) Proration.--For purposes of the fourth calendar quarter
of 2018, the Secretary of the Treasury (or the Secretary's
delegate) shall issue such guidance, rules, or regulations as
are deemed appropriate to provide that the amendments made by
this section are applied on a prorated basis for purposes of
wine removed during such quarter.
SEC. 6032. ADJUSTMENT OF ALCOHOL CONTENT LEVEL FOR
APPLICATION OF EXCISE TAX RATES.
(a) In General.--Paragraphs (1) and (2) of section 5041(b)
of the Internal Revenue Code of 1986 are amended by striking
``14 percent'' each place it appears and inserting ``16
percent''.
(b) Effective Date.--The amendments made by this section
shall apply to wine removed during calendar years beginning
after December 31, 2017.
SEC. 6033. DEFINITION OF MEAD AND LOW ALCOHOL BY VOLUME WINE.
(a) In General.--Section 5041 of the Internal Revenue Code
of 1986, as amended by section 335 of the Protecting
Americans from Tax Hikes Act of 2015, is amended--
(1) in subsection (a), by striking ``Still wines'' and
inserting ``Subject to subsection (h), still wines'', and
(2) by adding at the end the following new subsection:
``(h) Mead and Low Alcohol by Volume Wine.--
``(1) In general.--For purposes of subsections (a) and
(b)(1), mead and low alcohol by volume wine shall be deemed
to be still wines containing not more than 16 percent of
alcohol by volume.
``(2) Definitions.--
``(A) Mead.--For purposes of this section, the term `mead'
means a wine--
``(i) containing not more than 0.64 gram of carbon dioxide
per hundred milliliters of wine, except that the Secretary
may by regulations prescribe such tolerances to this
limitation as may be reasonably necessary in good commercial
practice,
``(ii) which is derived solely from honey and water,
``(iii) which contains no fruit product or fruit flavoring,
and
``(iv) which contains less than 8.5 percent alcohol by
volume.
``(B) Low alcohol by volume wine.--For purposes of this
section, the term `low alcohol by volume wine' means a wine--
``(i) containing not more than 0.64 gram of carbon dioxide
per hundred milliliters of wine, except that the Secretary
may by regulations prescribe such tolerances to this
limitation as may be reasonably necessary in good commercial
practice,
``(ii) which is derived--
``(I) primarily from grapes, or
``(II) from grape juice concentrate and water,
``(iii) which contains no fruit product or fruit flavoring
other than grape, and
``(iv) which contains less than 8.5 percent alcohol by
volume.''.
(b) Effective Date.--The amendments made by this section
shall apply to wine removed during calendar years beginning
after December 31, 2017.
Subtitle D--Distilled Spirits
SEC. 6041. REDUCED RATE OF EXCISE TAX ON CERTAIN DISTILLED
SPIRITS.
(a) In General.--Section 5001 of the Internal Revenue Code
of 1986 is amended by redesignating subsection (c) as
subsection (d) and by inserting after subsection (b) the
following new subsection:
``(c) Reduced Rate.--
``(1) In general.--In the case of a distilled spirits
operation, the otherwise applicable tax rate under subsection
(a)(1) shall be--
``(A) $2.70 per proof gallon on the first 100,000 proof
gallons of distilled spirits, and
``(B) $13.34 per proof gallon on the first 22,130,000 of
proof gallons of distilled spirits to which subparagraph (A)
does not apply,
on proof gallons which have been distilled or processed by
such operation or imported by
[[Page S1827]]
the importer which are removed during the calendar year for
consumption or sale by such operation or imported into the
United States in such year by such importer.
``(2) Controlled groups.--
``(A) In general.--In the case of a controlled group, the
proof gallon quantities specified under subparagraphs (A) and
(B) of paragraph (1) shall be applied to such group and
apportioned among the members of such group in such manner as
the Secretary or his delegate shall by regulations prescribe.
``(B) Definition.--For purposes of subparagraph (A), the
term `controlled group' shall have the meaning given such
term by subsection (a) of section 1563, except that `more
than 50 percent' shall be substituted for `at least 80
percent' each place it appears in such subsection.
``(C) Rules for non-corporations.--Under regulations
prescribed by the Secretary, principles similar to the
principles of subparagraphs (A) and (B) shall be applied to a
group under common control where one or more of the persons
is not a corporation.
``(D) Single taxpayer.--Pursuant to rules issued by the
Secretary, 2 or more entities (whether or not under common
control) that produce distilled spirits marketed under a
similar brand, license, franchise, or other arrangement shall
be treated as a single taxpayer for purposes of the
application of this subsection.''.
(b) Conforming Amendment.--Section 7652(f)(2) of the
Internal Revenue Code of 1986 is amended by striking
``section 5001(a)'' and inserting ``subsection (a)(1) of
section 5001, determined as if subsection (c)(1) of such
section did not apply''.
(c) Application of Reduced Tax Rate for Foreign
Manufacturers and Importers.--Subsection (c) of section 5001
of the Internal Revenue Code of 1986, as added by subsection
(a), is amended--
(1) in paragraph (1), by inserting ``and assigned to such
electing importer pursuant to paragraph (3)'' after ``by such
importer'', and
(2) by adding at the end the following new paragraph:
``(3) Reduced tax rate for foreign manufacturers and
importers.--
``(A) In general.--In the case of any proof gallons of
distilled spirits which have been produced outside of the
United States and imported into the United States, the rate
of tax applicable under paragraph (1) (referred to in this
paragraph as the `reduced tax rate') may be assigned by the
distilled sprits operation (provided that such operation
makes an election described in subparagraph (B)(ii)) to any
electing importer of such proof gallons pursuant to the
requirements established by the Secretary of the Treasury
under subparagraph (B).
``(B) Assignment.--The Secretary of the Treasury, in
consultation with the Secretary of Health and Human Services
and the Secretary of the Department of Homeland Security,
shall, through such rules, regulations, and procedures as are
determined appropriate, establish procedures for assignment
of the reduced tax rate provided under this paragraph, which
shall include--
``(i) a limitation to ensure that the number of proof
gallons of distilled spirits for which the reduced tax rate
has been assigned by a distilled spirits operation to any
importer does not exceed the number of proof gallons produced
by such operation during the calendar year which were
imported into the United States by such importer,
``(ii) procedures that allow the election of a distilled
spirits operation to assign and an importer to receive the
reduced tax rate provided under this paragraph,
``(iii) requirements that the distilled spirits operation
provide any information as the Secretary determines necessary
and appropriate for purposes of carrying out this paragraph,
and
``(iv) procedures that allow for revocation of eligibility
of the distilled spirits operation and the importer for the
reduced tax rate provided under this paragraph in the case of
any erroneous or fraudulent information provided under clause
(iii) which the Secretary deems to be material to qualifying
for such reduced rate.
``(C) Controlled group.--For purposes of this section, any
importer making an election described in subparagraph (B)(ii)
shall be deemed to be a member of the controlled group of the
distilled spirits operation, as described under paragraph
(2).''.
(d) Effective Date.--
(1) In general.--Subject to paragraph (2), the amendments
made by this section shall apply to distilled spirits removed
after September 30, 2018.
(2) Proration.--For purposes of the fourth calendar quarter
of 2018, the Secretary of the Treasury (or the Secretary's
delegate) shall issue such guidance, rules, or regulations as
are deemed appropriate to provide that the amendments made by
this section are applied on a prorated basis for purposes of
distilled spirits removed during such quarter.
SEC. 6042. BULK DISTILLED SPIRITS.
(a) In General.--Section 5212 of the Internal Revenue Code
of 1986 is amended--
(1) by striking ``Bulk distilled spirits on which'' and
inserting ``Distilled spirits on which'', and
(2) by striking ``bulk'' each place it appears.
(b) Effective Date.--The amendments made by this section
shall apply distilled spirits transferred in bond in any
calendar quarters beginning more than 1 year after the date
of the enactment of this Act.
Subtitle E--Excise Tax Administration
SEC. 6051. INCREASE INFORMATION SHARING TO ADMINISTER EXCISE
TAXES.
(a) In General.--Section 6103(o) of the Internal Revenue
Code of 1986 is amended by adding at the end the following
new paragraph:
``(3) Taxes imposed by section 4481.--Returns and return
information with respect to taxes imposed by section 4481
shall be open to inspection by or disclosure to officers and
employees of United States Customs and Border Protection of
the Department of Homeland Security whose official duties
require such inspection or disclosure for purposes of
administering such section.''.
(b) Conforming Amendments.--Paragraph (4) of section
6103(p) of the Internal Revenue Code of 1986 is amended by
striking ``or (o)(1)(A)'' each place it appears and inserting
``, (o)(1)(A) or (o)(3)''.
______