[Federal Register Volume 90, Number 181 (Monday, September 22, 2025)]
[Rules and Regulations]
[Pages 45325-45334]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-18281]
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DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade Bureau
27 CFR Parts 26 and 27
[Docket No. TTB-2022-0009; T.D. TTB-201; Re: T.D. TTB-186, Notice No.
215]
RIN 1513-AC89
Implementation of Refund Procedures for Craft Beverage
Modernization Act Federal Excise Tax Benefits Applicable to Imported
Alcohol
AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.
ACTION: Final rule; Treasury decision.
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SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) is making
permanent, with two changes, temporary regulations published in the
Federal Register on September 23, 2022, relating to reduced excise tax
rates and tax credits for imported distilled spirits, wines, and beer.
These regulatory amendments implement changes made to the Internal
Revenue Code by the Taxpayer Certainty and Disaster Tax Relief Act of
2020, which amended the Craft Beverage Modernization Act provisions of
the Tax Cuts and Jobs Act of 2017. This rule finalizes the procedures
for industry members to claim limited reduced tax rates and tax credits
for imported alcohol products that are entered for consumption in the
United States. Specifically, this rule finalizes provisions in a
temporary rule that outlines the process for foreign producers to
assign reduced tax rates and tax credits to importers, and for
importers to accept and apply the assigned tax benefits to imported
products. This final rule clarifies that only the foreign producer who
produces the product may assign the applicable tax benefits on
distilled spirits, wine, or beer to U.S. importers, and extends by one
calendar quarter the timeframe for those foreign producers to submit
these assignments to TTB.
DATES: Effective September 22, 2025, the temporary regulations
published in the Federal Register at 87 FR 58021 on September 23, 2022,
are adopted as final with the amendments described below.
FOR FURTHER INFORMATION CONTACT: Tammy McNeely, Regulations and
Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G
Street NW, Box 12, Washington, DC 20005; phone 202-453-2265, ext. 092.
SUPPLEMENTARY INFORMATION:
I. Background
A. TTB's Temporary Regulations Implementing the Transition To Refunds
to Obtain Tax Benefits for Imported Alcohol
This final rule adopts as permanent, with two changes, the Alcohol
and Tobacco Tax and Trade Bureau's (TTB's) temporary regulations
implementing changes to the Internal Revenue Code of 1986 (IRC)
pursuant to the Taxpayer Certainty and Disaster Tax Relief Act of 2020.
TTB published the temporary rule, T.D. TTB-186, in the Federal Register
on September 23, 2022, at 87 FR 58021, along with a concurrent notice
of proposed rulemaking, Notice No. 215, at 87 FR 58043, soliciting
comments on the temporary regulations and proposing a clarifying
change.
The temporary regulations established procedures for claiming
reduced tax rates and tax credits established under the Craft Beverage
Modernization Act (CBMA) (collectively, ``tax benefits'' or ``CBMA tax
benefits'') for imported alcohol products entered for consumption \1\
in the United States beginning in 2023.
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\1\ The temporary regulations implemented statutory tax refund
provisions that apply to imported products ``removed'' after
December 31, 2022. See 26 U.S.C. 5001(c)(4), 5041(c)(7), and
5051(a)(6). TTB regulations at 27 CFR 27.48 provide that any
internal revenue taxes payable on imported distilled spirits, wines,
and beer upon release from customs custody are collected, accounted
for, and deposited as internal revenue collections by U.S. Customs
and Border Protection (CBP) in accordance with CBP requirements.
There are different types of entry under CBP regulations, and
``entered for consumption'' refers to a type of customs entry filed
to introduce the goods into the stream of U.S. commerce. Such
entries are subject to applicable tax and duties. Accordingly, TTB
interprets the term ``removed'' as used in the CBMA tax refund
statutory provisions for imported products to mean ``entered for
consumption.'' For purposes of this temporary rule, ``entered for
consumption'' includes withdrawal from a CBP bonded warehouse for
consumption.
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Enactment of Temporary CBMA Tax Benefits
The CBMA tax benefits were first made available in 2018, through
the Tax Cuts and Jobs Act (Pub. L. 115-97).\2\ These CBMA provisions
established reduced tax rates and tax credits applicable to specified
limited quantities of domestic and foreign producers' distilled
spirits, wine, and beer. These quantities are subject to controlled
group limitations, which are described more fully later in this
document. Domestic producers are eligible to apply the CBMA tax
benefits when they pay tax to TTB. For imported products, foreign
producers must assign tax benefits to importers of their products, who
then must elect to take them. Beginning in 2018, U.S. Customs and
Border Protection (CBP) administered these provisions for imported
alcohol and established procedures for foreign producers to assign tax
benefits to importers, as well as for importers to receive the benefits
and apply them at the time of entry.
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\2\ The ``Craft Beverage Modernization and Tax Reform Act.''
These statutory provisions apply to beverage and non-beverage
alcohol. See Public Law 115-97, sections 13801-13808 (CBMA
provisions of the law commonly known as the Tax Cuts and Jobs Act)
and 131 Stat. 2054 at 2169-78.
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The CBMA tax benefits for imported alcohol products \3\ are as
follows:
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\3\ These tax benefits apply to alcohol from foreign countries
and other areas outside of the customs territory of the United
States (as defined in 19 CFR 101.1) that is imported into the United
States (as defined at 26 U.S.C. 7701(a)(9) as the 50 States and the
District of Columbia) and entered for consumption subject to tax.
Foreign producers may not assign tax benefits to domestic distilled
spirits plants, bonded wine cellars, or breweries that receive bulk
distilled spirits, natural wine, or beer that is withdrawn without
payment of tax from customs custody for transfer to their bonded
premises under 26 U.S.C. 5232, 5364, or 5418.
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Each foreign distilled spirits producer may assign a
limited quantity of tax benefits in the form of reduced tax rates to
importers of their products. The reduced tax rates may be assigned for
the first 22,230,000 proof gallons of that foreign producer's
production imported into the United States in a calendar year. These
rates are, for each foreign producer, $2.70 per proof gallon on the
first 100,000 proof gallons, and $13.34 per proof gallon on the next
22,130,000 proof gallons, imported into the United States.
Each foreign wine producer may assign a limited quantity
of tax benefits in the form of tax credits to importers of their
products. The tax credits may be assigned for the first 750,000 wine
gallons of that producer's production imported into the United States
in a calendar year. The credits are, for each foreign producer, $1 per
wine gallon on
[[Page 45326]]
the first 30,000 wine gallons of wine imported, 90 cents on the next
100,000 wine gallons imported, and 53.5 cents on the next 620,000 wine
gallons imported. The tax credits apply to all wine tax rates,\4\
except that CBMA provides for adjusted credits for imported wine
eligible for the hard cider tax rate (6.2 cents, 5.6 cents, and 3.3
cents, respectively, for each of the above quantities).
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\4\ Wine tax rates vary based on a number of factors such as
alcohol and carbonation content. See 26 U.S.C. 5041.
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Each foreign brewer may assign a limited quantity of tax
benefits in the form of a reduced tax rate of $16 per barrel. This
reduced tax rate may be assigned to importers for the first 6,000,000
barrels produced by that foreign producer and imported into the United
States in a calendar year.
These CBMA tax benefits first applied to calendar years 2018 and
2019.\5\
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\5\ See Public Law 115-97, sections 13801-13808 (CBMA provisions
of the law commonly known as the Tax Cuts and Jobs Act).
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Enactment of Permanent CBMA Tax Benefits
Prior to their initial expiration date in 2019, the CBMA tax
benefits were extended and finally made permanent through the Tax
Relief Act of 2020.\6\
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\6\ See Public Law 116-94, section 144 (Further Consolidated
Appropriations Act, 2020 extending and amending CBMA provisions);
Public Law 116-260, Division EE, sections 106-110 (Tax Relief Act of
2020 making CBMA provisions permanent with amendments).
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In addition to making the CBMA tax benefits permanent, the Tax
Relief Act of 2020 transferred responsibility for administering CBMA
tax benefits for imported alcohol from CBP to the Department of the
Treasury (Treasury) as of January 1, 2023.\7\ The Tax Relief Act of
2020 amendments also changed the way importers could take advantage of
CBMA tax benefits, requiring that importers pay the full tax rate \8\
on imported alcohol products to CBP and then subsequently submit refund
claims to obtain the tax benefit. This replaced the prior process by
which importers could apply the CBMA tax benefit to tax payments made
to CBP in connection with the entry of the products into the United
States. Consequently, beginning January 1, 2023, importers began paying
the full tax rate on imported alcohol products to CBP and submitting
refund claims to TTB (as delegated by Treasury, see section I(C) of
this document).
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\7\ See Section 107(e) & (f) of the Tax Relief Act of 2020 (Pub.
L. 116-260, Division EE) (134 Stat. 3048). Paragraph (e) reads,
``The Secretary of the Treasury (or the Secretary's delegate within
the Department of the Treasury) shall implement and administer
sections 5001(c)(4), 5041(c)(7), and 5051(a)(6) of the Internal
Revenue Code of 1986, as added by this Act, in coordination with the
United States Customs and Border Protection of the Department of
Homeland Security.'' Paragraph (f) reads, ``The Secretary of the
Treasury (or the Secretary's delegate within the Department of the
Treasury) shall prescribe such regulations as may be necessary or
appropriate to carry out the purposes of this section. . . .''
\8\ Here the ``full tax rate'' refers to the tax rate applicable
without taking into account any reduced rates or credits available
under CBMA; importers of distilled spirits may still pay a reduced
rate to CBP based on eligible wine or flavor content pursuant to 26
U.S.C. 5010 and implementing regulations at 27 CFR 27.76 and 27.77.
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TTB's temporary regulations set forth the procedures under which
foreign distilled spirits producers, wine producers, and brewers
(collectively ``foreign producers'') assign CBMA tax benefits to
importers, and the procedures by which importers may receive the
assignments and file refund claims with TTB to receive those benefits,
starting in 2023. Generally, the temporary regulations: (1) Require
foreign producers to register with TTB to assign tax benefits to
importers; (2) establish the information foreign producers must submit
to register and assign those benefits; and (3) establish the
information that importers must provide to claim a refund based on the
foreign producer's assignment of tax benefits to them. The information
required in a claim includes information the importer will generally
submit through CBP's Automated Commercial Environment (ACE) as part of
the entry summary,\9\ as well as information the importer submits
directly to TTB with the claim.
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\9\ TTB understands that the vast majority of importers file
entry and entry summary data electronically in ACE. As explained
below, the electronic submission of import data in ACE is a
prerequisite for using TTB's CBMA importer claims interface.
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The temporary regulations also include provisions to implement
statutory limitations on CBMA tax benefits. For example, the CBMA tax
benefits available for assignment by foreign producers are subject to
controlled group limitations that apply to producers under common
ownership. See 26 U.S.C. 5001(c)(3)(C), 5041(c)(4), and 5051(a)(5)(B).
Accordingly, the temporary regulations require foreign producers to
either certify that they are not under common ownership with other
alcohol producers or to provide details about their owners when
registering with TTB, as authorized by 26 U.S.C. 6038E.\10\ The
temporary regulations also address the statutory provisions that
provide authority to revoke the eligibility of foreign producers to
assign and importers to receive CBMA tax benefits if the foreign
producer submits erroneous or fraudulent information that is material
to qualifying for CBMA tax benefits. See 26 U.S.C. 5001(c)(3)(B)(iv),
5041(c)(6)(B)(iv), and 5051(a)(4)(B)(iv).
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\10\ See 26 U.S.C. 6038E (authorizing Treasury to require that
foreign producers provide information related to a foreign
producer's assignment of CBMA tax benefits to importers, including
information about a foreign producer's controlled group structure).
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B. TTB Administration of CBMA Importer Refunds
Since the effective date of the temporary regulations, TTB has
administered the CBMA importer refund program within an online system,
``myTTB.'' \11\ Using myTTB, foreign producers register, receive a TTB-
issued Foreign Producer ID, and assign the CBMA tax benefits to
importers. Importers then use myTTB to obtain any tax benefits assigned
to them. Once the importer has imported the products to which the
assigned tax benefit applied, the importer uses the myTTB system to
submit refund claims. To streamline submission and validation of an
importer's claim, myTTB links the foreign producer's assignment
information with the importer's entry data submitted in ACE, allowing
importers to see the relevant ACE data and identify the specific
entries for which they may submit a CBMA claim.
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\11\ TTB is currently engaged in a multiyear initiative to
develop and deploy ``myTTB,'' a single, online interface for all
industry transactions with TTB, including permit, label, and formula
applications, as well as tax filings, payments, and claims. When
complete, myTTB will provide both industry and TTB with online
access to a consolidated view of an industry member's records,
approvals, and filings.
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Since the initial launch of the myTTB foreign producer registration
and assignment system in October 2022, over 23,000 foreign producer
registrations have been submitted to TTB from 129 countries. Foreign
producers have submitted over 70,000 assignments of CBMA tax benefits
to over 2,200 importers. Since the initial launch of the myTTB CBMA
importer refund claims system in April 2023, over 20,000 valid claims
have been submitted by U.S. importers and, as of August 2025, TTB has
paid over $679 million in refunds on those claims. As of August 2025,
the median processing time for claims over the life of the program has
been 16 days with approximately 24 percent of system submitted claims
processed using automated validation, leading to claim payments to
importers in typically under a week. Processing times have declined as
the program has matured. In fiscal year 2025 TTB has achieved an
automated validation rate of 66 percent,
[[Page 45327]]
with over 77 percent of claims processed within 15 days and over 99
percent of claims processed within 45 days.
Based on program performance to date as well as comments received
in response to Notice No. 215, TTB is finalizing the temporary
regulations as published with only two changes. First, TTB is
finalizing the proposed amendment included in Notice No. 215 that
clarifies that a foreign producer ``may not assign CBMA tax benefits on
distilled spirits, wine, or beer unless it produced the product.''
Second, TTB is extending the time period for foreign producers to
submit CBMA tax benefit assignments for an additional three months,
that is, through the first calendar quarter of the year following the
calendar year for which the benefits are assigned.
C. TTB Authority
TTB regulates, among other things, the importation of distilled
spirits, wine, and malt beverages \12\ pursuant to the Federal Alcohol
Administration Act (FAA Act). TTB also administers the provisions of
the IRC with respect to the taxation of domestically produced distilled
spirits, wine, and beer.\13\
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\12\ The terms ``distilled spirits'' and ``wine,'' when used in
the context of the FAA Act, apply only to distilled spirits and wine
for nonindustrial use, and ``wine'' is further defined under the FAA
Act as containing ``not less than 7 percent'' alcohol by volume. See
27 CFR 1.10. Additionally, the FAA Act defines ``malt beverage'' as
``a beverage made by the alcoholic fermentation of an infusion or
decoction, or combination of both, in potable brewing water, of
malted barley with hops, or their parts, or their products, and with
or without other malted cereals, and with or without the addition of
unmalted or prepared cereals, other carbohydrates or products
prepared therefrom, and with or without the addition of carbon
dioxide, and with or without other wholesome products suitable for
human food consumption.'' Id.
\13\ Under the IRC, alcohol subject to tax as ``distilled
spirits'' includes both beverage and industrial spirits, as well as
wine that contains more than 24 percent alcohol by volume. See 26
U.S.C. 5001(a)(1) and (3). Alcohol subject to tax as ``wine''
includes wine containing up to 24 percent alcohol by volume. The IRC
defines ``beer'' as ``beer, ale, porter, stout, and other similar
fermented beverages (including sake or similar products) of any name
or description containing one-half of 1 percent or more of alcohol
by volume, brewed or produced from malt, wholly or in part, or from
any substitute therefor.'' See 26 U.S.C. 5052(a). References to
``beer,'' ``wine'' and ``distilled spirits'' in TTB's IRC
regulations refer to those terms as they are defined in the IRC.
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The FAA Act requires a TTB permit before engaging in certain
activities related to distilled spirits, wine, and malt beverages,
including importation. See 27 U.S.C. 203(a). Section 203(a) provides
that it shall be unlawful, except pursuant to a ``basic permit,'' to
engage in the business of importing into the United States distilled
spirits, wine, or malt beverages. Section 203(a) also states that it is
unlawful for any person so engaged to sell, offer or deliver for sale,
contract to sell, or ship, in interstate or foreign commerce, directly
or indirectly or through an affiliate, imported distilled spirits,
wine, or malt beverages without a basic permit. Because many--but not
all--alcohol products that are subject to tax under the IRC fall under
the FAA Act definitions of distilled spirits, wine, and malt beverages,
most--but not all--alcohol importers are required to obtain a TTB
importer's basic permit under the FAA Act.\14\
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\14\ Importers of industrial alcohol, wine under 7 percent
alcohol by volume, or beer that is not a ``malt beverage'' may
engage in the business of importing such alcohol without an FAA Act
basic permit.
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Chapter 51 of the IRC pertains to the taxation and regulation of
distilled spirits, wine, and beer. The IRC imposes a Federal excise tax
on all distilled spirits, wine, and beer manufactured in or imported
into the United States. See 26 U.S.C. 5001, 5041, and 5051,
respectively. The tax on distilled spirits, wine, and beer either
imported from foreign countries or brought into the United States from
beyond the customs territory of the United States, as defined in 19 CFR
101.1, including the U.S. Virgin Islands, is generally collected by CBP
along with any import duties as part of CBP's exercise of its delegated
customs revenue functions.\15\ See Treasury Order 100-20, ``Delegation
of Customs revenue functions to Homeland Security,'' dated October 30,
2024.
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\15\ Imported bulk distilled spirits, natural wine, and beer
withdrawn without payment of tax from customs custody and
transferred in bond to a domestic distilled spirits plant, bonded
wine cellar, or brewery under 26 U.S.C. 5232, 5364, and 5418 is
outside the scope of this rule as, in those cases, the tax is
collected from domestic industry members by TTB and not from the
importers by CBP.
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The IRC provides general authority to the Secretary of the Treasury
(Secretary) to issue regulations to carry out the provisions of the
IRC. See 26 U.S.C. 7805(a). With respect to the tax benefits available
under CBMA to foreign producers and importers, the IRC directs the
Secretary to issue rules, regulations, and procedures as appropriate
for the assignment of such tax benefits. See 26 U.S.C. 5001(c)(3),
5041(c)(6), and 5051(a)(4). Additionally, these include procedures for
allowing a foreign producer to assign and an importer to receive CBMA
tax benefits; limitations to ensure that the quantity of products for
which a foreign producer assigns reduced rates does not exceed the
statutory quantity limitations on such rates; requirements for foreign
producers to provide any information the Secretary determines necessary
and appropriate for making assignments; and procedures allowing for
revocation of a foreign producer's eligibility to assign reduced rates
based on erroneous or fraudulent information provided by the foreign
producer that is material to qualifying for a reduced rate. Id. The IRC
further provides specific authority for the Secretary to require
foreign producers seeking to make assignments of CBMA tax benefits to
provide information, at such time and in such manner, as the Secretary
may prescribe, including information about the controlled group
structure of such foreign producer. See 26 U.S.C. 6038E. An importer
will only be allowed a refund for CBMA tax benefits if a foreign
producer has elected to assign, and the importer has elected to
receive, such benefits in accordance with these rules, regulations, and
procedures. See, e.g., 26 U.S.C. 5001(c)(4)(C).
TTB administers these IRC and FAA Act provisions pursuant to
section 1111(d) of the Homeland Security Act of 2002, as codified at 6
U.S.C. 531(d). In addition, the Secretary has delegated certain
administrative and enforcement authorities to TTB through Treasury
Order 120-01. Responsibility for collecting the excise taxes incident
to the importation of distilled spirits, wines, and beer is vested by
statute with the Secretary. See 26 U.S.C. 7801. Under the authority of
the Homeland Security Act of 2002, the Secretary has delegated these
customs revenue functions to the Secretary of Homeland Security. See
Treasury Department Order 100-20. Accordingly, TTB regulations provide
that such taxes are collected, accounted for, and deposited as internal
revenue collections by CBP in accordance with CBP requirements. See 27
CFR 27.48; see also 27 CFR 26.200(d).
Sections 107(e) and (f) of the Tax Relief Act of 2020 set forth the
Secretary's ability to delegate the implementation, administration, and
rulemaking authority concerning the assignment of a foreign producer's
CBMA benefits to importers, and the claims of importers seeking to
receive those benefits, to ``the Secretary's delegate within the
Department of the Treasury.'' Treasury delegated that authority to TTB.
See Treasury Department Order 120-1.
TTB regulations implementing the applicable provisions of chapter
51 of the IRC are found in 27 CFR part 27. Specifically, this part
contains requirements relative to the importation of distilled spirits,
wine, and beer into the United States from foreign countries,
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including the information importers are required to submit upon
importation and the records importers must keep. Regulations at 27 CFR
part 26 implement chapter 51 of the IRC as it applies to distilled
spirits, wine, and beer brought into the United States from the U.S.
Virgin Islands.
TTB has authority under section 2(d) of the FAA Act, Public Law 74-
401 (1935) ``to prescribe such rules and regulations as may be
necessary to carry out [its] powers and duties'' under the FAA Act. The
TTB regulations at 27 CFR part 1 implement the permit requirements of
the FAA Act.
II. Notice No. 215 and the Comments Received
On September 23, 2022, TTB published in the Federal Register at 87
FR 58021, T.D. TTB-186 amending the regulations in 27 CFR parts 26 and
27. In the same issue of the Federal Register, TTB also requested
public comments on the temporary rule via a notice of proposed
rulemaking, Notice No. 215 (87 FR 58043). Notice No. 215 solicited
comments on a proposed amendment to the temporary regulations at 27 CFR
27.262(c)(1), clarifying that a foreign producer ``may not assign CBMA
tax benefits on distilled spirits, wine, or beer unless it produced the
product.''
TTB received 15 comments in response to Notice No. 215. Commenters
included industry members, trade organizations, consulting firms, and a
government agency, specifically: Three Badge Beverage Corp., B. United
International Inc., the Small Business Administration (SBA) Office of
Advocacy, New Zealand Winegrowers, the American Craft Spirits
Association, Soley Beverage, the Beer Institute, the French Wine and
Spirits Exporters Association, National Association of Beverage
Importers, Inc., an individual, and 5 anonymous commenters.
Twelve commenters raised concerns about the financial implications
of the CBMA imports refund program; three commenters raised other
questions or concerns regarding importers' interactions with TTB's CBMA
import refund program; and six commenters raised questions or concerns
regarding the interaction of foreign producers with the program. The
specific questions and concerns within these areas, and TTB's
responses, are set forth in detail below.
A. Comments Relating to Financial Implications of the Refund Provisions
Twelve commenters raised concerns about the financial implications
of the refund provisions in the temporary and proposed regulations.
Some of the commenters pointed out the cash flow disruptions to
importers resulting from the statutory change to refunds from the prior
process that allowed importers to take the reduced tax rates and tax
credits on the alcohol upon importation. Commenters also expressed
concerns about the frequency of claim filing periods and timing of
payment of refunds. Finally, commenters raised concerns over the
compliance costs of the new program.
Commenters raising cash flow concerns associated with the
transition to a refund system include three importers (Badge Beverage
Corp., B. United International Inc., and Soley Beverage, Inc.); three
trade organizations (New Zealand Winegrowers, the American Craft
Spirits Association, and the National Association of Beverage
Importers); one government agency (the SBA Office of Advocacy); and
four anonymous commenters.
In general, these commenters pointed out that being required to pay
the full rate of tax up front and subsequently file a refund claim can
impose significant cash flow issues for importers that were not present
under the prior statutory framework administered by CBP. Commenters
suggested that these cash flow concerns could disproportionately affect
smaller importers. Commenters encouraged TTB to find a way to allow
importers to take advantage of the CBMA tax benefits at the time of
initial tax payment, including by establishing exemptions from the
requirement to pay the full rate of tax for entities below certain
activity or liability thresholds.
Similar to the concerns raised over the transition to a refund
system, seven commenters raised specific cash flow concerns about the
quarterly claim period established in the temporary rule and TTB's
ability to timely pay refund claims. Specifically, these commenters
addressed TTB's temporary regulations that established a quarterly
refund claims period where importers are able to file refund claims on
products only after the close of the calendar quarter in which the
products were entered for consumption. The commenters were three trade
associations (the American Craft Spirits Association, the Beer
Institute, and the National Association of Beverage Importers); one
government agency (SBA Office of Advocacy); and three anonymous
commenters.
Commenters expressed general concerns that the impact on cash flow
of transitioning to a refund system would be exacerbated by the
quarterly claims period. The SBA Office of Advocacy, American Craft
Spirits Association, and National Association of Beverage Importers
further pointed out that interest does not begin to accrue on claims
until 90 days after a claim is filed which, when combined with the
quarterly claim period, could allow a prospective claimant to wait up
to six months after paying the tax before accruing interest on an
unpaid claim. The National Association of Beverage Importers commented
that this 90-day period before interest begins to accrue is a special
rule that, while statutory, is longer than the 45-day interest period
present with other types of refunds under the IRC. Given these
concerns, commenters emphasized the need for valid claims to be
processed and paid quickly. The National Association of Beverage
Importers also recommended that the quarterly filing period for refund
claims be instated for 18 months following publication of the final
rule, after which the filing period should transition to a monthly
period.
Finally, three commenters specifically raised concerns over
compliance costs associated with the new myTTB system. The SBA Office
of Advocacy asserted that TTB underestimated the burden associated with
learning an entirely new electronic filing system (that is, myTTB), and
that this burden may disproportionately affect small businesses who do
not necessarily have dedicated tax and compliance support staff. An
importer, B. United International, asserted in its comment that any
savings generated by CBMA tax benefits would be outweighed by the
administrative costs associated with the temporary rule. The National
Association of Beverage Importers also raised concerns about the impact
the refund system might have regarding their compliance costs,
specifically associated with the costs of any bonds required by CBP, if
refunds are not processed in a timely fashion.
TTB Response
The statutory changes made under the Tax Relief Act of 2020, which
transferred responsibility for administering CBMA tax benefits on
imported products from CBP to Treasury, also changed the method of
taking advantage of those benefits. The law specifically requires
importers to pay the full rate of tax and then obtain the tax benefit
by subsequently submitting a claim for refund from Treasury. While TTB
understands that the statutorily mandated transition to a refund system
may have created cash flow challenges that did not previously exist,
TTB does not have authority to implement a different system or exempt
importers from the statutory requirement to pay the full rate of tax.
Instead, TTB has worked to minimize
[[Page 45329]]
burdens on industry members by creating a system that expedites the
refund process.
TTB has attempted to design its CBMA import refund system to make
the refund process as straightforward as possible for foreign producers
and importers, while simultaneously collecting the minimum amount of
information needed for TTB to ensure that tax benefit assignments and
refund claims are valid and proper. This includes integrating entry
data from CBP's ACE system directly into myTTB to minimize the amount
of information importers must submit to TTB and avoid data entry
errors. Under the temporary regulations, and as of August 2025, TTB has
processed over 20,000 refund claims and paid over $679 million in tax
refunds to U.S. importers. As a result of this streamlined process,
since TTB began administering this program, these claims have had a
median processing time of 16 days; further, nearly a quarter of claims
have been processed using automated validation, leading to claim
payments to importers in typically under a week. Processing times have
declined as the program has matured. In fiscal year 2025, TTB has
achieved an automated validation rate of 66 percent, with over 77
percent of claims processed within 15 days and over 99 percent of
claims processed within 45 days.
Regarding the claim filing period, TTB is maintaining the quarterly
claim period that was established in the temporary regulations. As
explained in the temporary rule, this refund period is necessary to
provide TTB time to identify potential over-assignment of CBMA tax
benefits, particularly regarding controlled group limitations. CBMA tax
benefits are applied to an entire controlled group, which may include
both domestic and foreign producers, and as a result TTB needs the
opportunity to consolidate entry data and CBMA importer refund claims
(both paid and pending) with domestic removals to mitigate over-
assignment.
B. Other Comments Regarding Importers' Interactions With the CBMA
Importer Refunds Program
Three commenters raised other questions and concerns regarding
importers' interactions with TTB's CBMA importer refunds program.
Commenters had questions about the submission of data in CBP's
Automated Commercial Environment (ACE) and corrections to that data via
post-summary correction. Commenters asked about how claims would be
paid, and about amending claims after they are filed and/or paid by
TTB. These commenters were two trade associations (the Beer Institute
and the National Association of Beverage Importers) and one anonymous
commenter.
Specifically, the anonymous commenter stated that importers may not
receive CBMA tax benefit assignments from their suppliers until later
in the calendar year and may have already imported and liquidated
entries from those suppliers by the time they receive the assignment.
As a result, importers may not be able to submit in ACE the CBMA-
related data required by TTB's regulations.
The Beer Institute and the National Association of Beverage
Importers requested clarification on what happens if an importer files
a post-summary correction or a protest with CBP after submitting a
refund claim to TTB and/or after TTB has already paid a refund on a
submitted claim. They also asked whether payment of claims would be
consolidated, or if importers would receive refunds on a per-entry
basis.
TTB Response
As explained in the temporary rule, to minimize delay in issuing
refunds on valid claims, TTB's importer refund program relies on
electronic filing systems to link the two key elements of a prospective
CBMA import refund claim, that is: (1) the foreign producer's
assignment of the CBMA tax benefit, and (2) the importer's entry data
for the products subject to the foreign producer's assignment. The
process for an importer to submit a claim then primarily consists of
electing to receive tax benefit assignments by logging in to the myTTB
system for submitting CBMA importer refund claims, identifying the
applicable claim period and the lines on the customs entry summary or
summaries for which a claim will be filed, and verifying information
the importer previously submitted through ACE in the consumption entry
(including payment of tax to CBP). Importers receive a single
consolidated payment for all entry lines they choose to include in a
claim (and which are approved by TTB). With the initial launch of TTB's
CBMA importer refund claims program under the temporary regulations,
TTB published numerous guidance materials about the program addressing
many of the specific questions raised by the commenters; these
materials included walkthroughs (user guides) of each component of the
system and frequently asked questions. TTB's CBMA importer refund
claims program guidance is available at https://www.ttb.gov/regulated-commodities/beverage-alcohol/cbma/cbma-imports.
Regarding situations in which an importer does not receive a CBMA
tax benefit assignment until after an entry summary is filed, the
temporary regulations generally require that importers provide CBMA tax
benefit assignment information in the entry summary, either in the
initial filing or in a post-summary correction. If an assignment is
received after entry summary but before entry liquidation, the importer
is required to submit the assignment information via a post-summary
correction. Information submitted via post-summary correction is then
typically available in the TTB CBMA importer refund claims system
within 48 hours. For situations in which an entry has already
liquidated before the importer receives the CBMA tax benefit assignment
(and as a result the importer cannot provide the required data in ACE
via post-summary correction), TTB has published guidance on an
alternate claims procedure for specific circumstances in which it is
not possible for an importer to provide required information in ACE.
See Industry Circular 2023-1, ``Alternate Procedure for Submission of
CBMA Importer Claims,'' available at https://www.ttb.gov/public-information/industry-circulars/ttb-industry-circular-2023-1.
Regarding situations where an importer files a post-summary
correction or a protest with CBP on an entry after submitting a refund
claim to TTB and/or after TTB has already paid a refund on a claim, TTB
notes that importers are responsible for ensuring that the data that
they have filed in ACE is accurate before submitting their claims
through myTTB. As a result, it should be uncommon for changes to be
made to the information forming the basis of the claim after the claim
has been submitted. If an importer makes such a change, the importer
may ultimately need to resubmit their claim or file an additional claim
to reflect the appropriate entry information. This may include filing
an additional claim under the procedures established in Industry
Circular 2023-1, referenced above. TTB will assist importers
individually as needed to address situations where an entry is modified
by a post-summary correction or protest after a claim on that entry has
already been filed with TTB.
C. Comments Regarding Foreign Producers' Interactions With the CBMA
Importer Refunds Program
Six commenters raised questions or concerns regarding foreign
producers' interactions with TTB's CBMA importer refunds program.
Specifically,
[[Page 45330]]
commenters posed questions about certain data elements in either the
foreign producer registration or CBMA tax benefit assignment.
Commenters also sought clarification on the appropriate entity to
submit CBMA tax benefit assignments and related rules governing third
parties acting on behalf of foreign producers. Commenters also posed
questions about the practicalities of submitting assignments. Finally,
one commenter sought clarification of the application of controlled
group rules to foreign producers.
In general, the commenters sought clarification of the practical
application of the temporary regulations, raising questions that TTB
has since responded to through comprehensive guidance published on its
CBMA Import Resources page at https://www.ttb.gov/alcohol/cbma-imports.
Guidance featured on the CBMA Import Resources page includes program
overviews for importers and foreign producers, step-by-step
walkthroughs of all aspects of the myTTB CBMA system in the form of
both user guides and recorded webinars, and answers to over 40
frequently asked questions (FAQs). TTB has also addressed these and
similar questions on a case-by-case basis in direct individual
interactions with industry members through the TTB Call Center and
Contact Forms.
TTB's responses to specific areas of concern are provided below.
1. Foreign Producer Registrations and Ownership Information
Two trade associations--the French Wine and Spirits Exporters
Association and the National Association of Beverage Importers--
submitted questions regarding the data elements in either the foreign
producer registration or CBMA tax benefit assignment, expressing
concerns over the collection and protection of foreign producers'
ownership information. The National Association of Beverage Importers
questioned the requirement in the temporary regulations that foreign
producers submit information for persons holding a 10 percent or more
ownership interest in the registering foreign producer and asked
whether this collection of information was consistent with what is
required of domestic taxpayers. The French Wine and Spirits Exporters
Association requested assurance that the foreign producer's ownership
information will not be accessible to importers or other third parties
either on TTB's website or through a Freedom of Information Act
request.
TTB Response
Regarding the collection of foreign producers' ownership
information, as explained in the temporary rule, these requirements are
necessary to implement the statutory controlled group rules, which
limit eligibility for tax benefits when there is common ownership with
other producers. Specifically, the IRC provides that the quantity
limitations for the CBMA tax benefits are applied to the entire
controlled group and shall be apportioned among the members of the
controlled group. See 26 U.S.C. 5001(c)(3)(C), 5041(c)(3), and
5051(a)(5)(B).
While it is the foreign producer's ultimate responsibility to
ensure that it does not assign tax benefits in excess of the quantities
allowed, the temporary regulations at 27 CFR 27.256 require foreign
producers who are under common ownership with other foreign or U.S.
alcohol producers also claiming CBMA tax benefits to provide basic
identifying information for any individual or entity that owns 10
percent or more of the foreign producer. This level of information is
consistent with what TTB collects in applications for domestic producer
permits and registrations. See 27 CFR 19.93(b), 24.110(c), and
25.66(b). As TTB stated in the temporary rule, TTB believes that this
is the minimum amount of ownership information that is reasonably
capable of identifying and validating the existence of controlled
groups, and therefore necessary for enforcing the statutory controlled
group rules that limit tax benefit assignments when there is common
ownership. Regarding the disclosure of foreign producers' ownership
information, all information collected as part of the foreign producer
registration is taxpayer information protected from unauthorized
disclosure as provided at 26 U.S.C. 6103.
2. Foreign Producer Registration and Food Facility Registration Numbers
(FDA IDs)
Both the French Wine and Spirits Exporters Association and the
National Association of Beverage Importers addressed the requirement
that foreign producers provide in their TTB registration their Food
Facility Registration number(s) (FDA IDs) obtained from the U.S. Food
and Drug Administration. They requested clarification on what to submit
in situations where the foreign producer has multiple facilities with
FDA IDs and/or uses third party bottling facilities that have their own
FDA IDs.
TTB Response
Under the temporary regulations, in the foreign producer
registration, the foreign producer must provide ``The Food Facility
Registration number(s) obtained from the U.S. Food and Drug
Administration (FDA) under 21 CFR 1.225 that may be reported to FDA
under 21 CFR 1.281(a)(6)(ii) for the purposes of importing into the
United States the foreign producer's alcohol products.'' Accordingly,
the foreign producer should report in its registration the same FDA
ID(s) that it expects to be reported to FDA in connection with the
importation of its products into the United States. TTB has also
addressed this question on its CBMA Import Resources web page in FAQ
FP-2 (https://www.ttb.gov/alcohol/cbma-imports).
3. CBMA Assignments and Expressing Quantities
The French Wine and Spirits Exporters Association addressed the
requirement in the temporary regulations that foreign producers submit
their assignment quantities in myTTB using wine gallons or proof
gallons, expressing the concern that most foreign producers operate in
the metric system, and it could be difficult for them to accurately
convert their intended assignment quantities to wine gallons or proof
gallons when making their assignments.
TTB Response
The Federal excise tax and the CBMA tax refund and credit
provisions are set forth in the law in quantities expressed as wine
gallons and proof gallons. To assist foreign producers in making this
conversion, TTB has published metric conversion factors on its CBMA
Importer Resources web page in FAQ CB-C6 (https://www.ttb.gov/alcohol/cbma-imports).
4. CBMA Assignments and Third Parties
Four trade organizations sought clarification on how the rules for
making CBMA tax benefit assignments apply to third parties who act on
behalf of foreign producers. These commenters were the Beer Institute,
New Zealand Winegrowers, the National Association of Beverage
Importers, and the French Wine and Spirits Exporters Association. The
French Wine and Spirits Exporters Association and the National
Association of Beverage Importers both pointed to the negociant model
in France as a situation where it may be unclear who can or should
submit assignments of CBMA tax benefits. Under that model, as explained
by the comments, while the negociant is not
[[Page 45331]]
the producer of wine, negociants may bottle bulk wine and are primarily
responsible for arranging the distribution of that wine to foreign
countries. As a result, only the negociant has direct knowledge of the
quantities of wine being exported through each U.S. importer. The
commenters suggested that producers be able to authorize negociants to
submit to TTB CBMA tax benefit assignments relating to the producers'
products. Similarly, New Zealand Winegrowers expressed a concern that
the temporary regulations did not adequately capture contract
winemaking, where the winery producing the wine does not necessarily
own the wine and may not know where the wine is distributed. Instead,
in contract winemaking situations, the comment suggests that the brand
owner will have direct knowledge of the importers to whom wine will be
shipped. The comment states that, in this situation, the brand owner
may be the more appropriate entity to submit CBMA tax benefit
assignments to TTB.
Regarding third parties acting on behalf of foreign producers, the
Beer Institute requested confirmation that a U.S. importer could be
authorized to register a foreign producer and submit that producer's
assignments in the CBMA foreign producer registration and assignment
system. The French Wine and Spirits Exporters Association asked whether
it would be possible for a foreign producer to authorize multiple third
parties to act on its behalf in TTB's system, and for those third
parties to submit assignments to different importers. The French Wine
and Spirits Exporters Association and the National Association of
Beverage Importers both asked whether foreign producers would be held
liable for erroneous or fraudulent information submitted to TTB by the
foreign producer's agent. The National Association of Beverage
Importers also asked, conversely, whether TTB would consider taking
action against an importer's permit if the importer, acting as agent
for a foreign producer, submitted erroneous or fraudulent information
in the CBMA foreign producer registration and assignment system on the
foreign producer's behalf.
TTB Response
As noted above, several commenters sought clarification on what
party can submit CBMA tax benefit assignments and related rules
governing third parties acting on behalf of foreign producers in the
CBMA foreign producer registration system. In Notice No. 215, TTB
proposed regulatory text, consistent with the statute, to clarify that
only the entity that produces the distilled spirits, wine, or beer may
assign the CBMA tax benefits on the products produced. In this
document, TTB is finalizing that provision, updating 27 CFR 27.262 to
include in paragraph (c)(1) the statement that a foreign producer may
not assign CBMA tax benefits on distilled spirits, wine, or beer unless
it produces the product. As explained in Notice No. 215, in the case of
wine or beer produced outside the United States and imported into the
United States, CBMA allows the person who produced the wine to assign
the tax benefit, 26 U.S.C. 5041(c)(6)(A), and allows the brewer (i.e.,
the producer) to assign the tax benefit, 26 U.S.C. 5051(a)(4)(A),
5052(d) (definition of brewer). For distilled spirits produced outside
the United States and imported into the United States, CBMA allows a
``distilled spirits operation'' to assign tax benefits. 26 U.S.C.
5001(c)(3). Although the definition of ``distilled spirits operation''
includes activities that do not constitute production, see 26 U.S.C.
5002(a)(2), and 5171(a), CBMA also states that the assignment of tax
benefits for distilled spirits cannot exceed quantities produced by
such foreign distilled spirits operation. See 26 U.S.C.
5001(c)(3)(B)(i)(I). TTB interprets this limitation to mean that a
foreign distilled spirits operation cannot assign tax benefits on
distilled spirits unless such operation has produced the distilled
spirits. This interpretation is consistent with the same limitations
imposed on foreign producers of wine and beer. See 26 U.S.C.
5041(c)(6)(A) & (B)(i)(I) and 5051(a)(4)(A) & (B)(i)(I).
Further, regulatory provisions allow foreign producers to authorize
third parties to act on their behalf. The temporary regulations,
finalized in this document, provide procedures at 27 CFR 27.260 for
foreign producers to authorize additional persons (agents) to act on
their behalf within the CBMA foreign producer registration and
assignment system. The authorized agents must maintain adequate proof
of authorization and provide it to TTB upon request. TTB has published
guidance specifying what serves as adequate proof of authorization on
its CBMA Import Resources web page under FAQ FP-6 (https://www.ttb.gov/alcohol/cbma-imports).
In response to concerns about whether a foreign producer could
allow certain types of third parties, such as a U.S. importer or a
negociant, to submit CBMA tax benefit assignments on its behalf, TTB
does not place any limitations on who a foreign producer may authorize
as its agent, or how many agents a foreign producer can authorize to
act on its behalf. As a result, a foreign producer could authorize
these persons to submit its foreign producer registration and CBMA tax
benefit assignments on its behalf, and it could authorize multiple
agents to manage assignments for different products. However, when
entering registration or assignment information into TTB's system,
those entries are deemed to be made solely as the foreign producer's
agent, and not on behalf of the importer.\16\ As a result, the foreign
producer and their agents (including any agents who are also importers)
are responsible for ensuring that information entered in TTB's system
is accurate and consistent with the foreign producer's intent.
---------------------------------------------------------------------------
\16\ Specifically, an individual authorized as an agent for a
foreign producer who also works for a U.S. importer would be acting
solely as agent for the foreign producer when interacting with the
CBMA foreign producer registration and assignment system for that
foreign producer.
---------------------------------------------------------------------------
3. Practicalities of Submitting CBMA Assignments
Regarding practicalities of submitting assignments of CBMA tax
benefits, the French Wine and Spirits Exporters Association asked
whether assignments can be increased during the year, in case foreign
producers may want to make smaller assignments throughout the calendar
year. An anonymous commenter suggested that some foreign producers may
prefer to submit CBMA tax assignments after the end of the calendar
year for inventory calculation or other reasons and requested that TTB
extend the time period for submitting assignments through February of
the next year. The commenter also urged TTB to find a simple way to
associate an importer's entry with a specific foreign producer's
assignment.
TTB Response
First, in response to the question about whether a foreign producer
may increase the quantity of an assignment during the year, TTB
confirms that a foreign producer may increase the quantity of an
assignment during the year, up to the limits set by law. TTB has
published guidance on the process for doing so on its CBMA Import
Resources web page under FAQ TB-9 (https://www.ttb.gov/alcohol/cbma-imports).
Second, one commenter requested that TTB extend the timeframe for
submitting CBMA tax benefit assignments to TTB. The temporary
regulations provided that assignments of CBMA tax benefits must be
submitted on or before December 31 of the calendar year for which the
CBMA tax
[[Page 45332]]
benefits are assigned. See 27 CFR 27.262. As explained in the temporary
rule, TTB believed requiring the foreign producer to make its
assignments for that year within the calendar year to which the
assignment applied was necessary to effectively administer the
provisions. For example, TTB explained that it may be impossible to
adequately determine or verify a foreign producer's controlled group
status beyond the applicable year, and any change in controlled group
assignments could affect other assignments among members of the
controlled group. In addition, any effect on a foreign producer's
assignments to one importer could affect the foreign producer's
assignments to other importers, compounding these complications when
applying assignments over prior years. While TTB continues to believe
that a firm deadline within close proximity to the end of the calendar
year is necessary for these reasons, TTB also recognizes that some
foreseeable circumstances require additional flexibility. Specifically,
because the claims filing period for the final calendar quarter
generally does not open until January 1 of the subsequent calendar
year, it is possible that an importer may only discover a problem with
one of its assignments after the December 31 deadline has passed. As a
result, in this final rule, TTB is extending the timeframe for
submitting CBMA tax benefit assignments through March 31 of the
calendar year following the calendar year for which the CBMA tax
benefits are assigned.
4. Controlled Groups
Finally, one anonymous commenter sought clarification of the
controlled group limitations on the CBMA tax benefits, and specifically
how those limitations may apply differently to foreign versus domestic
producers. The commenter explained their understanding that,
domestically, controlled group limitations on CBMA tax benefit
quantities apply to both producers and ``brand owners,'' and
accordingly an owner of multiple brands would be limited to a single
quantity of CBMA tax benefits for all of the brands combined even if
the brand owner contracted out the production of their various brands
to multiple unrelated producers. Conversely, the comment suggests,
controlled group limitations for foreign producers apply only to
producers and not brand owners.
TTB Response
TTB first notes that the statutory controlled group limitations
apply equally to both foreign and domestic producers. That is, the IRC
provides that the quantity limitations for the CBMA tax benefits are
applied to the entire controlled group and shall be apportioned among
the members of the controlled group (regardless of whether those
members are foreign producers, domestic producers, or both). See 26
U.S.C. 5001(c)(3)(C), 5041(c)(3), and 5051(a)(5)(B).
However, TTB notes that there are other, different limitations
applicable to domestic producers and foreign producers. For example,
TTB understands the limitations described by the commenter concerning
``brand owners'' who are not producers to be referencing the CBMA
``single taxpayer'' provisions. See 26 U.S.C. 5001(c)(2)(D),
5041(c)(3), and 5051(a)(5)(C). These provisions operate similarly to
the controlled group limitations, but apply only to domestic production
and generally provide that two or more entities are treated as a
``single taxpayer'' when they produce beer, wine, or distilled spirits
``under a license, franchise, or other arrangement,'' even if those
entities are not under common control.
Because these single taxpayer provisions apply only to domestic
production, the commenter suggests that the playing field favors
foreign production. TTB notes that there are different statutory
limitations on CBMA tax benefits applicable only to imported products.
For example, foreign producers do not directly realize CBMA tax
benefits but must assign them to U.S. importers and negotiate any
compensation for the assignment with the importer. Additionally, under
the law, domestic producers are able to claim their CBMA tax benefits
at the time of initial taxpayment, while importers must pay the full
rate of tax and subsequently file a refund claim. TTB does not have
authority to alter any of these statutory limitations through
regulation.
III. Adoption of Final Rule
Based on the foregoing, TTB has determined that the temporary
regulations published in T.D. TTB-186 should be adopted as a final
rule, with the following changes discussed above:
In Sec. 27.262(c), which addresses limitations to
assignments, TTB is adding the statement in paragraph (c)(1) that a
foreign producer may not assign CBMA tax benefits on distilled spirits,
wine, or beer unless it produces the product.
In Sec. 27.262(d), which concerns timing of CBMA tax
benefits assignments, TTB is extending the timeframe for submitting an
assignment, from December 31 to March 31 of the calendar year following
the calendar year for which the CBMA tax benefits are assigned.
IV. Regulatory Analyses and Notices
A. Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.), TTB has analyzed the potential economic effects of this action
on small entities. In lieu of the final regulatory flexibility analysis
required to accompany final rules under 5 U.S.C. 604, section 605
allows the head of an agency to certify that a rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities. TTB certifies that this final rule will not have a
significant economic impact on a substantial number of small entities.
This final rule finalizes regulations initially set forth in the
temporary rule T.D. TTB-186, ``Implementation of Refund Procedures for
Craft Beverage Modernization Act Federal Excise Tax Benefits Applicable
to Imported Alcohol,'' and the accompanying notice of proposed
rulemaking, Notice No. 215, of the same name.
Pursuant to 26 U.S.C. 7805(f), TTB submitted T.D. TTB-186 and
Notice No. 215 to the Chief Counsel for Advocacy of the Small Business
Administration (SBA) for comment on the impact of the regulations on
small businesses. The SBA Office of Advocacy submitted a public comment
stating that the proposed rules lacked the substantive information
necessary to establish a factual basis for certification under the
Regulatory Flexibility Act. In particular, the Office of Advocacy
stated that the certification statement did not identify the small
entities affected by the rules, and did not adequately describe the
costs of the rules to those small entities.
The following analysis provides the factual basis for TTB's
certification under section 605.
i. Impact on Small Entities
While TTB believes the majority of businesses subject to the
regulations are small businesses, the regulations in this document will
not have a significant impact on those small entities. Under the North
American Industry Classification System (NAICS), the small entities
affected by the final regulations are beverage alcohol importers
falling under NAICS 424810 (``Beer and Ale Merchant Wholesalers'') and
NAICS 424820 (Wine and Distilled Alcoholic Beverage Merchant
Wholesalers).
[[Page 45333]]
From these entities, TTB is requiring the minimum information
necessary to administer the statutory requirements of The Tax Relief
Act of 2020 concerning the CBMA tax benefits for imported alcohol. To
the extent that any burden exists, such burden flows from the statute
itself and the shift to the refund method of obtaining CBMA tax
benefits. The electronic systems established by TTB have not posed a
significant burden because the majority of the foreign producers and
importers already filed electronically with FDA and CBP, respectively,
and TTB's systems are not substantially different or more burdensome
than those established by FDA and CBP. Furthermore, TTB has taken
extensive steps through the publication of guidance to ensure that
industry members were able to easily acclimate to the new system.
TTB has published and maintained comprehensive guidance about its
CBMA importer refund program to help industry members successfully take
advantage of their tax benefits. TTB's CBMA Import Resources page
(https://www.ttb.gov/alcohol/cbma-imports) includes program overviews
for importers and foreign producers, step-by-step walkthroughs of all
aspects of the myTTB CBMA system in the form of both user guides and
recorded webinars, and answers to over 40 frequently asked questions
(FAQs). TTB also works directly with industry members to ensure their
claims are successfully submitted and processed.
Importers and foreign producers have been operating under TTB's
temporary regulations for nearly three years. In that time, over 23,000
foreign producer registrations have been submitted to TTB from 129
countries. Foreign producers have submitted over 70,000 assignments of
CBMA tax benefits to over 2,200 importers. Since the initial myTTB
launch of TTB's CBMA importer refund claims system in April 2023, over
20,000 valid claims have been submitted by U.S. importers and as of
August 2025, TTB has paid over $679 million in refunds on those claims.
As of August 2025, the median processing time for claims over the life
of the program has been 16 days, with approximately 24 percent of
system submitted claims processed using automated validation, leading
to claim payments to importers in typically under a week. Processing
times have declined as the program has matured. In fiscal year 2025 TTB
has achieved an automated validation rate of 66 percent, with over 77
percent of claims processed within 15 days and over 99 percent of
claims processed within 45 days.
As noted above, TTB provides direct assistance to industry members
on their claims. Data on the assistance sought by industry members
demonstrates that industry has, in general, quickly adapted to TTB's
CBMA importer refund program. For example, TTB's call center data has
shown a steady decrease in questions on CBMA claims even while the
volume of claims processed has increased.
For the reasons described above, and in accordance with the
Regulatory Flexibility Act (5 U.S.C. 601 et seq.), TTB certifies that
the regulations will not have a significant economic impact on a
substantial number of small entities. The rule will not impose, or
otherwise cause, a significant increase in reporting, recordkeeping, or
other compliance burdens on a substantial number of small entities. TTB
expects that the regulations will not have significant secondary or
incidental effects on a substantial number of small entities.
Accordingly, a regulatory flexibility analysis is not required.
B. Executive Order 12866
It has been determined that this rule is not a significant
regulatory action as defined by Executive Order 12866. Therefore, a
regulatory impact assessment is not required.
C. Paperwork Reduction Act
Regulations addressed in this final rule contain current
collections of information that have been previously reviewed and
approved by the Office of Management and Budget (OMB) in accordance
with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3507). An
agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a valid
control number assigned by OMB.
The collection of information associated with the regulations
adopted in T.D. TTB-186 is assigned control number 1513-0142. Revisions
to this collection and their connections to the regulatory amendments
in T.D. TTB-186 are described in detail in that document, which also
solicited comment regarding the revisions. TTB received no comments on
the revisions. In cases where TTB revised the collections, these
revisions were submitted to and approved by OMB.
D. Effective Date
This document finalizes temporary regulations that were effective
on October 24, 2022, to implement changes made to the IRC by the Tax
Relief Act of 2020. These regulations implemented statutory provisions
that applied to foreign production removed after December 31, 2022. See
e.g., 26 U.S.C. 5001(c)(4). Because industry members have been
operating for almost three years under not only this statutory
framework but also the temporary regulations finalized in this
document, and to avoid any risk of disruption of the provision of tax
refunds to which industry members are entitled, TTB finds good cause
under 5 U.S.C. 553(d)(3) to dispense with the effective date limitation
in 5 U.S.C. 553(d). This final rule will be effective on September 22,
2025.
List of Subjects
27 CFR Part 26
Alcohol and alcoholic beverages, Beer, Excise taxes, Imports,
Liquors, Notice requirements, Reporting and recordkeeping requirements,
Wine.
27 CFR Part 27
Alcohol and alcoholic beverages, Beer, Excise taxes, Imports,
Liquors, Notice requirements, Reporting and recordkeeping requirements,
Wine.
Amendments to the Regulations
For the reasons discussed in the preamble, the temporary
regulations published in the Federal Register on September 23, 2022, at
87 FR 58021, as T.D. TTB-186, are adopted as final, with the changes as
discussed above and set forth below:
PART 27--IMPORTATION OF DISTILLED SPIRITS, WINES, AND BEER
0
1. The authority citation for part 27 continues to read as follows:
Authority: 5 U.S.C. 552(a), 19 U.S.C. 81c, 1202; 26 U.S.C. 5001,
5007, 5008, 5010, 5041, 5051, 5054, 5061, 5121, 5122-5124, 5201,
5205, 5207, 5232, 5273, 5301, 5313, 5382, 5555, 6038E, 6065, 6109,
6302, 7805.
0
2. Section 27.262 is amended by revising paragraphs (c)(1) and (d) to
read as follows:
Sec. 27.262 Foreign producer's assignment of CBMA tax benefits.
* * * * *
(c) * * *
(1) General. A foreign producer may not assign CBMA tax benefits on
distilled spirits, wine, or beer unless it produced the product. The
foreign producer may assign quantities that are limited to the number
of proof gallons, wine gallons, and beer barrels in paragraph (b)(4) of
this section, and also cannot exceed the quantities of the foreign
producer's distilled spirits, wine, and beer that are reasonably
projected to be imported into the United
[[Page 45334]]
States during the specified calendar year by the importer receiving the
assignment.
* * * * *
(d) Timing. Assignments of CBMA tax benefits may be submitted to
TTB beginning no earlier than October 1st of the calendar year prior to
the year for which the CBMA tax benefits are to be assigned.
Assignments of CBMA tax benefits must be submitted on or before March
31 of the calendar year following the calendar year for which the CBMA
tax benefits are assigned.
* * * * *
Signed: September 18, 2025.
Mary G. Ryan,
Administrator.
Approved: September 18, 2025.
Kenneth J. Kies,
Assistant Secretary for Tax Policy.
[FR Doc. 2025-18281 Filed 9-19-25; 8:45 am]
BILLING CODE 4810-10-P