New Tax Law Gives Tax Break to Brewers and Will Impact TTB Reporting

Changes in Taxes and TTB Reporting for Brewers

As you may have already heard, the Tax Cuts and Jobs Act, which includes the Craft Beverage Modernization and Tax Reform Act (CBMTRA), was passed by Congress last Wednesday. This historic legislation paves the way for distinctly lower excise tax rates for alcoholic beverage manufacturers. Orchestra Software, makers of the industry leading craft beverage production software, has already begun the process of addressing these legislative changes to ensure their customers’ Tax and Trade Bureau (TTB) reporting reflects the significant tax savings now being afforded to craft brewers and distillers.

In essence, what the CBMTRA does is reduce the federal excise tax from $7.00 to $3.50 per barrel, of the first 60,000 barrels produced, for domestic brewers manufacturing fewer than 2 million barrels annually. Additionally, this act will also reduce the federal excise tax to $16 per barrel for the first 6 million barrels for all other brewers and importers, while keeping the same excise tax for brewers producing in excess of 6 million barrels annual, which remains at $18 per barrel. These rates, as prescribed by the CBMTRA, will be enacted on January 1st and continue through the end of 2019. The Brewers Association (BA) estimates that this benefit to craft brewers will constitute an annual savings of more than $142 million, not to mention the potential creation of 9,000 jobs within the industry. For further details, take a look at the article by Brewbound regarding the reform act’s impact on alcoholic beverage producers.

From the Brewers Perspective

This reformation of the excise tax is a welcome change according to Three Weavers Brewing Company’s founder, Lynne Weaver. During an interview with NPR’s All Things Considered last week, she outlined how craft brewers are clearly going to benefit from this legislative change. “Next year when it’s actually going to take place, our goal is to produce 10,000 barrels, so it’s going to be quite a bit of money for us. It’s going to be close to $21,000. That’s a part-time person. It allows us to hire somebody else. It helps quite a bit,” says Weaver.

She goes on to stress the importance this change offers to the fastest growing segment of the industry, the smaller neighborhood breweries. “So the vast majority of the breweries that are opening today or even are open are probably 3,000 barrels or less in production and really service a very small community. So you can’t really look at it in the sense of how many breweries are opening because it doesn’t necessarily mean that all of them are yet profitable. So if anything, those smaller breweries really do need this tax break just to be able to continue supporting their communities, creating those jobs.”

Orchestrated and the TTB BRO

Weaver herself maintains the brewery’s finances and production costs by utilizing OrchestratedBEER®, within which the TTB Report is a central tool. Being that every step of the production process is accounted for financially as well, the built in TTB Brewers Report of Operations populates all the metrics required to report each year. Now that the federal excise tax rate has been reduced, Orchestra is already in the process of updating how these totals are expressed in the TTB report, ensuring their customers aren’t paying at the 2017 rate, not to mention making room for last minute 2017 accounting that will be addressed early in the year before moving on to the lower rate for 2018.

So while these much needed reductions in excise tax are generating much excitement within the various alcoholic beverage industries, being able to adapt to that change by being prepared for the new metrics is just one more way that Orchestrated enables you to Conduct Your Craft.