[Senate Report 114-15]
[From the U.S. Government Publishing Office]


                                                        Calendar No. 38
114th Congress     }                                   {         Report
                                 SENATE
 1st Session       }                                   {         114-15

======================================================================



 
             CRAFT BEVERAGE BOND SIMPLIFICATION ACT OF 2015

                                _______
                                

                 April 14, 2015.--Ordered to be printed

                                _______
                                

   Mr. Hatch, from the Committee on Finance, submitted the following

                              R E P O R T

                         [To accompany S. 904]

    The Committee on Finance, having considered an original 
bill, S. 904, to amend the Internal Revenue Code of 1986 to 
remove bond requirements and extend filing periods for certain 
taxpayers with limited excise tax liability, having considered 
the same, reports favorably thereon without amendment and 
recommends that the bill do pass.

                                CONTENTS

                                                                   Page
 I. LEGISLATIVE BACKGROUND............................................1
II. EXPLANATION OF THE BILL...........................................2
        A. Remove Bonding Requirements for Certain Taxpayers 
            Subject to Federal Excise Taxes on Distilled Spirits, 
            Wine, and Beer (sec. 1 of the bill and secs. 5061(d), 
            5173(a), 5351, 5401 and 5551 of the Code)............     2
III.BUDGET EFFECTS OF THE BILL........................................4

IV. VOTES OF THE COMMITTEE............................................4
 V. REGULATORY IMPACT AND OTHER MATTERS...............................5
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED.............5

                       I. LEGISLATIVE BACKGROUND

    The Committee on Finance, having considered S. 904, the 
``Craft Beverage Bond Simplification Act of 2015,'' a bill to 
amend the Internal Revenue Code of 1986 to remove bond 
requirements and extend filing periods for certain taxpayers 
with limited excise tax liability, reports favorably thereon 
without amendment and recommends that the bill do pass.

Background and need for legislative action

    Background.--Based on a proposal recommended by Ranking 
Member Wyden, the Committee on Finance marked up original 
legislation (the ``Craft Beverage Bond Simplification Act of 
2015'') on February 11, 2015, and, with a majority present, 
ordered the bill favorably reported.
    Need for legislative action.--Taxpayers liable for not more 
than $50,000 per year in alcohol excise taxes have the option 
to pay taxes quarterly but may choose to pay taxes semi-monthly 
because the taxpayers would have to increase their bond amounts 
to cover the full amount of taxes paid on a quarterly basis. By 
eliminating the bond requirements for these taxpayers, it will 
be less burdensome for them to file excise taxes quarterly and 
less burdensome to administer the collection of these taxes. 
Taxpayers with less than $1,000 in excise tax liability on wine 
during the previous calendar year may file their excise taxes 
annually; however, taxpayers with less than $1,000 in excise 
tax liability on distilled spirits or beer during the previous 
calendar year are not eligible to file taxes annually.

                      II. EXPLANATION OF THE BILL


A. Remove Bonding Requirements for Certain Taxpayers Subject to Federal 
 Excise Taxes on Distilled Spirits, Wine, and Beer (sec. 1 of the bill 
      and secs. 5061(d), 5173(a), 5351, 5401 and 5551 of the Code)


                              PRESENT LAW

    An excise tax is imposed on all distilled spirits, wine, 
and beer produced in, or imported into, the United States.\1\ 
The tax liability legally comes into existence the moment the 
alcohol is produced or imported but payment of the tax is not 
required until a subsequent withdrawal or removal from the 
distillery, winery, brewery, or, in the case of an imported 
product, from customs custody or bond.\2\ The excise tax is 
paid on the basis of a return\3\ and is paid at the time of 
removal unless the taxpayer has a withdrawal bond in place. In 
that case, the taxes are paid with semi-monthly returns, the 
periods for which run from the 1st to the 15th of the month and 
from the 16th to the last day of the month, with the returns 
and payments due not later than 14 days after the close of the 
respective return period.\4\ For example, payments of taxes 
with respect to removals occurring from the 1st to the 15th of 
the month are due with the applicable return on the 29th. 
Taxpayers who expect to be liable for not more than $50,000 in 
excise taxes for the calendar year may pay quarterly.\5\ Under 
regulations, wineries with less than $1,000 in annual excise 
taxes may file and pay on an annual basis.\6\ Taxpayers who 
were liable for a gross amount of taxes of $5,000,000 or more 
for the preceding calendar year must make deposits of tax for 
the current calendar year by electronic funds transfer.\7\
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    \1\Secs. 5001, 5041, and 5051. Unless otherwise stated, all section 
references are to the Internal Revenue Code of 1986, as amended (the 
``Code'').
    \2\Secs. 5006, 5043, and 5054. In general, proprietors of distilled 
spirit plants, proprietors of bonded wine cellars, brewers, and 
importers are liable for the tax. Secs. 5005, 5043, and 5054. Customs 
and Border Protection (CBP) collects the excise tax on imported 
products.
    \3\Sec. 5061.
    \4\Under a special rule, September has three return periods. Sec. 
5061.
    \5\Sec. 5061.
    \6\27 C.F.R. sec. 24.273.
    \7\Sec. 5061.
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    Certain removals or transfers are exempt from tax. For 
example, distilled spirits, wine, and beer may be removed 
either free of tax or without immediate payment of tax for 
certain uses,\8\ such as for export or an industrial use. Bulk 
distilled spirits, as well as wine and beer, may be transferred 
without payment of the tax between bonded premises under 
certain conditions specified in the regulations;\9\ such bulk 
products, if imported, may be transferred without payment of 
the tax to domestic bonded premises under certain 
conditions.\10\ The tax liability accompanies such a product 
that is transferred in bond.
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    \8\Such uses are specified in sections 5053, 5214, 5362, and 5414.
    \9\See, e.g., sec. 5212. Domestic bottled distilled spirits cannot 
be transferred in bond between distilleries. See 27 C.F.R. sec. 19.402.
    \10\Secs. 5005, 5232, 5364, and 5418. Imported bottled distilled 
spirits, wine, and beer cannot be transferred in bond from customs 
custody to a distillery, winery, or brewery. See sec. 5061(d)(2)(B).
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    Before commencing operations, a distiller must register, a 
winery must qualify, and a brewery must file a notice with the 
Alcohol and Tobacco Tax and Trade Bureau (TTB) and receive 
approval to operate.\11\ Various types of bonds (including 
operations bonds and tax deferral or withdrawal bonds) are 
required for any person operating a distilled spirits plant, 
winery, or brewery.\12\ The bond amounts are generally set by 
regulations and determined based on the underlying excise tax 
liability.\13\
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    \11\Secs. 5171, 5351-53, and 5401; 27 C.F.R. sec. 19.72(b) 
(distilled spirits plant), 27 C.F.R. sec. 24.106 (wine producer), 27 
C.F.R. sec. 25.61(a) (brewer).
    \12\Secs. 5173, 5354, 5401, and 5551; 27 C.F.R. parts 19 (Distilled 
Spirits), 24 (Wine), and 25 (Beer).
    \13\See, e.g., 27 CFR sec. 19.166(c) requiring a withdrawal bond 
for distilled spirits in the amount of excise tax that has not been 
paid (up to a maximum of $1 million); 27 CFR sec. 24.148(a)(2) 
requiring a wine bond to cover the amount of tax deferred (up to a 
maximum of $250,000); 27 CFR sec. 25.93(a) requiring a bond equal to 10 
percent of the maximum excise tax for which the brewer will be liable 
to pay during a calendar year for brewers required to file tax returns 
and remit excise taxes semimonthly and a bond equal to $1,000 for 
brewers who were liable for not more than $50,000 in excise taxes with 
respect to beer in the previous year and who reasonably expect to be 
liable for not more than $50,000 in such taxes during the current year.
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                           REASONS FOR CHANGE

    Taxpayers liable for not more than $50,000 per year in 
alcohol excise taxes have the option to pay taxes quarterly but 
may choose to pay taxes semi-monthly because the taxpayers 
would have to increase their bond amounts to cover the full 
amount of taxes paid on a quarterly basis. By eliminating the 
bond requirements for these taxpayers, it will be less 
burdensome for them to file excise taxes quarterly and less 
burdensome to administer the collection of these taxes.
    Taxpayers with less than $1,000 in excise tax liability on 
wine during the previous calendar year may file their excise 
taxes annually; however, taxpayers with less than $1,000 in 
excise tax liability on distilled spirits or beer during the 
previous calendar year are not eligible to file taxes annually.

                        EXPLANATION OF PROVISION

    The provision allows any distilled spirits, wine, or beer 
taxpayer who reasonably expects to be liable for not more than 
$50,000 per year in alcohol excise taxes (and who was liable 
for not more than $50,000 in such taxes in the preceding 
calendar year) to file and pay such taxes quarterly, rather 
than semi-monthly. The provision also creates an exemption from 
the bond requirement in the Code for these taxpayers. The 
provision includes conforming changes to the other sections of 
the Code describing bond requirements.
    Additionally, the provision allows any distilled spirits, 
wine, or beer taxpayer with a reasonably expected alcohol 
excise tax liability of not more than $1,000 per year to file 
and pay such taxes annually rather than on a quarterly basis.

                             EFFECTIVE DATE

    The provision is effective 90 days after the date of 
enactment.

                    III. BUDGET EFFECTS OF THE BILL


                         A. Committee Estimates

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the following statement is made 
concerning the estimated budget effects of the revenue 
provision of the ``Craft Beverage Bond Simplification Act of 
2015'' as reported.
    The provision is estimated to reduce Federal fiscal year 
budget receipts by less than $500,000 for the period 2015-2025.

                B. Budget Authority and Tax Expenditures


Budget authority

    In compliance with section 308(a)(1) of the Congressional 
Budget and Impoundment Control Act of 1974 (``Budget 
Act''),\14\ the Committee states that no provisions of the bill 
as reported involve new or increased budget authority.
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    \14\Pub. L. No. 93-344.
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Tax expenditures

    In compliance with section 308(a)(1) of the Budget Act, the 
Committee states that the provisions of the bill have a 
negligible effect on tax expenditures (see part A., above).

            C. Consultation With Congressional Budget Office

    In accordance with section 403 of the Budget Act, the 
Committee advises that the Congressional Budget Office has not 
submitted a statement on the bill. The letter from the 
Congressional Budget Office will be provided separately.

                       IV. VOTES OF THE COMMITTEE

    In compliance with paragraph 7(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee states that, with a 
majority present, the ``Craft Beverage Bond Simplification Act 
of 2015'' was ordered favorably reported by voice vote on 
February 11, 2015.

                 V. REGULATORY IMPACT AND OTHER MATTERS


                          A. Regulatory Impact

    Pursuant to paragraph 11(b) of rule XXVI of the Standing 
Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact that might be 
incurred in carrying out the provisions of the bill.

Impact on individuals and businesses, personal privacy and paperwork

    The bill removes bond requirements for taxpayers with 
limited alcohol excise tax liability. The provisions of the 
bill are not expected to impose additional administrative 
requirements or regulatory burdens on individuals or 
businesses.
    The provisions of the bill do not impact personal privacy.

                     B. Unfunded Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the tax provisions of the 
reported bill do not contain Federal private sector mandates or 
Federal intergovernmental mandates on State, local, or tribal 
governments within the meaning of Public Law 104-4, the 
Unfunded Mandates Reform Act of 1995.

                       C. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service Reform and 
Restructuring Act of 1998 (``IRS Reform Act'') requires the 
staff of the Joint Committee on Taxation (in consultation with 
the Internal Revenue Service and the Treasury Department) to 
provide a tax complexity analysis. The complexity analysis is 
required for all legislation reported by the Senate Committee 
on Finance, the House Committee on Ways and Means, or any 
committee of conference if the legislation includes a provision 
that directly or indirectly amends the Internal Revenue Code 
and has widespread applicability to individuals or small 
businesses. The staff of the Joint Committee on Taxation has 
determined that there are no provisions that are of widespread 
applicability to individuals or small businesses.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In the opinion of the Committee, it is necessary in order 
to expedite the business of the Senate, to dispense with the 
requirements of paragraph 12 of rule XXVI of the Standing Rules 
of the Senate (relating to the showing of changes in existing 
law made by the bill as reported by the Committee).

                                  [all]