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1 1 (December 15, 2022)

handle is hein.crs/govejts0001 and id is 1 raw text is: Congressional ____ a*Research Service The Excise Tax Credit for Wine and Flavor Content December 15, 2022 Internal Revenue Code (IRC) Section 5010 (26 U.S.C. @5010) provides a credit against excise tax for wine and flavors content in distilled spirits. Under current law, there is a federal excise tax levied on distilled spirits. The tax rate varies from $2.70 to $13.50 per proof gallon of distilled spirits depending upon the producer or importer and the amount of distilled spirits that have already been removed or imported during the year. The Section 5010 credit can reduce tax owed because wine and flavors are generally taxed at lower rates than distilled spirits. There has, at times, been interest in repealing the credit, as some argue it distorts production by creating an incentive for producers to use wine and flavors to reduce their tax burden. Legislative History Section 5010 was created by P.L. 96-598. That law was enacted on December 24, 1980, and Section 5010 took effect retroactively, as of January 1, 1980. Section 5010 has been amended several times since enactment, although those amendments have not significantly changed the tax credit. The Deficit Reduction Act of 1984 (P.L. 98-369) increased the distilled spirits excise tax and amended the Section 5010 credit accordingly. The Technical and Miscellaneous Revenue Act of 1988 (P.L. 100-647) added alcohol derived from flavors distilled at a distilled spirits plant as an exception to (i.e., ineligible for) the tax credit for flavors content. The Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508) increased the distilled spirits excise tax and amended the Section 5010 credit accordingly. Subpart A of Part IX of P.L. 115-97 (those provisions are commonly referred to as the Craft Beverage Modernization Act, CBMA) made several temporary changes to federal excise taxes on alcohol products. Among those changes were lower rates for certain alcohol products, depending on the amount that the producer or importer has removed or imported already during the year. Those changes were generally extended by the Further Consolidated Appropriations Act, 2020 (P.L. 116-94) and generally made permanent by the Consolidated Appropriations Act, 2021 (P.L. 116-260). Specifically for distilled spirits, CBMA provides for a reduced tax rate of $2.70 per proof gallon on the first 100,000 proof gallons of distilled spirits and $13.34 per proof gallon for the next 22,130,000 proof Congressional Research Service https://crsreports.congress.gov IN12063 CRS INSIGHT Prepared for Members and Committees of Congress

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