‘Small Producers Tax Credits for Everyone!’ (Said in my best globally famous talk show host voice.)
So you’ve heard that the Craft Beverage Modernization Act was made permanent. And you operate a winery or you support operational reporting for a winery. Now what?
Let’s Begin at the Beginning – Tax Class for Still Wine
Before you can figure out how to take a tax credit, you need to check the tax class. The rates of tax for still wine can be found in 26 U.S. Code SECTION 5041 (c) or by clicking here if you really want to read tax code. Effective January 1, 2021, still wine that is not more than 16% alcohol by volume (‘ABV’) is taxed at $1.07USD per gallon and still wine between 16% ABV and not more than 21% ABV is taxed at $1.57USD per gallon. That means that while the tax rate has not changed, the ABV for still wines in a specific tax class did change.
If you produce still wine and you have removed it tax paid from the winery’s bond, the excise taxes owed are based on the rates listed above. Still wine that is transferred from the winery’s bond to another bond (typically for storage or order fulfillment) and tax paid later is still eligible for the tax credit. In short, if you pay tax on still wine of your own production you are eligible for the tax credit described below.
Side Note – Labelling Rules
TTB labeling rules for listing the ABV on wine labels did not change. I received questions about this over the past two years and the listing requirements along with permitted tolerances, can be found HERE.
Tax Credit? What Tax Credit?
Effective January 1, 2021, among other changes, the words ‘For Small Domestic Producers’ is removed from that same 26 U.S. Code SECTION 5041(c) mentioned above. This permanently establishes that the following tax credits are available to all wine producers and importers:
- $1.00USD/gallon on the first 30,000 gallons produced in the United States or imported into the United States in a single calendar year
- $.90USD/gallon on the next 100,000 gallons
- $.535USD/gallon on the next 620,000 gallons
Up to 750,000 gallons of wine are eligible for some form of tax credit in a single calendar year. Note that while the tax class changes only applied to still wine, the tax credits apply to all types of wine.
Excise Tax Class? Check. Tax Credit? Check. Where Do I Claim the Credit?
Before you can claim the tax credits listed above, you need to first tell the Tobacco Tax and Trade Bureau (‘TTB’) that you have removed the wine from bond to tax paid status. If you work on the winemaking side of the business or support winery operations, you’ve probably heard the terms ‘702’ or ‘5120’, depending on your vintage in the industry. Those terms apply to the TTB Report of Wine Premises Operations, found HERE on the TTB’s website. This report is where a wine producer declares how much wine they have produced, what winemaking activity (including bottling) occurs and, among other things, what wine is removed from bond during a given reporting period. (Reporting periods vary based on production volume.) Just in case you’ve looked up the form and you’ve never filled one of these out before, there are two rows on the form where you list wine removed tax paid – Section A (Bulk Wines) on row 14 and Section B (Bottled Wines) row eight. Both rows have multiple cell options depending on the tax class and type of wine or hard cider that was removed, but those rows are where you specify what has been removed tax paid. Once wine has been reported as ‘removed taxpaid’, excise tax is owed on that wine. After the operations report is filed, it is time to file and pay the excise tax for the wine removed from bond along with claiming available tax credits.
The TTB Excise Tax Return or TTB F 5000.24sm, is where you declare the taxes you owe and credits allowed.
Updated Forms Available
There are now forms available for winemaking activity prior to January 1, 2018 and activity from January 1, 2018 to present. You can find the most common TTB forms HERE.
A Permanent Tax Credit is Not a Change in Tax Rate
Making these two changes permanent is great news for producers large and small. What needs to be clear is that these are two different changes – one to the up to 16% ABV tax rate and the other allowing all producers to claim a tax credit that had previously been reserved for small producers. While the net impact may be a reduction in taxes paid, it is not a reduction in a tax rate across the board.
For anyone who has read the relevant section of the 5,000 plus page document where these changes were made permanent, you will notice something missing from this post. This post is directed at domestic wine producers and does not explain how it may apply to importers of wine in the United States.
Need More Information?
Cronbach Law Group PC is a law firm located in Napa, California. Our focus is helping our clients understand the complex world of alcoholic beverage regulation – 50 states, 51 sets of rules. Let us be your guide and keep your busines priorities top of mind on along the way. www.winedeal.law
What Are 1099s?
by Zane Stevens | November 17, 2022 | Accounting, Bookkeeping, Business, Financial Services, Outsourced Accounting, Tax | 0 Comments
Tasks Your Winery Bookkeeper Can Offer
by Zane Stevens | April 26, 2022 | Bookkeeping, Outsourced Accounting, Wine Industry | 0 Comments
Is It the Right Time to Sell Your Business?
by ADAM WISKIND, CBI, BCA | April 21, 2022 | Bookkeeping, Business, Financial Services, Wine Industry | 0 Comments
Best Practices for Avoiding Wire Fraud in Your Small Business
by Zane Stevens | April 14, 2022 | Accounting, Bookkeeping, Business, Financial Services | 0 Comments
The Benefits of Using QuickBooks Online
by Zane Stevens | April 7, 2022 | Accounting, Bookkeeping, Bookkeeping Software, Business, Financial Services, Outsourced Accounting | 0 Comments
Five Things Your Alcohol Compliance Lawyer Wants You to Know
by Alicia Cronbach | March 31, 2022 | Bookkeeping, Business, Financial Services, Wine Industry | 0 Comments
Protea Conversations: Chelsea Kurnick
by Chelsea Kurnick | March 24, 2022 | Business, Financial Services, Protea Conversations | 0 Comments
What Should I Be Doing Weekly For Bookkeeping Tasks For My Business?
by Zane Stevens | March 10, 2022 | Accounting, Bookkeeping, Bookkeeping Software, Business, Financial Services, Outsourced Accounting | 0 Comments
Protea Conversations: Carter Welch
by Carter Welch | March 3, 2022 | Business, Financial Services, Protea Conversations | 0 Comments
Best Bookkeeping Software for Small Business
by Zane Stevens | February 24, 2022 | Accounting, Bookkeeping, Bookkeeping Software, Business, Financial Services, Outsourced Accounting | 0 Comments
Protea Conversations: Andrea Christensen
by Andrea Christensen | February 17, 2022 | Business, Financial Services, Protea Conversations | 0 Comments
Tips for Improving Your Accounts Receivable Process
by Zane Stevens | February 10, 2022 | Accounting, Bookkeeping, Business, Financial Services, Outsourced Accounting | 0 Comments
Major Differences Between Cash and Accrual Accounting
by Zane Stevens | February 3, 2022 | Accounting, Bookkeeping, Business, Financial Services, Outsourced Accounting | 0 Comments
Small Businesses, Sales Tax, and How One Mistake Could Close Your Business
by Zane Stevens | January 27, 2022 | Business, Financial Services, Tax | 0 Comments
Protea Conversations: John Comfort
by John Comfort | January 25, 2022 | Business, Financial Services, Protea Conversations | 0 Comments
Ten Critical Factors in Getting Your Business Off to a Fresh Start in 2022 (Part 3 of 3)
by Carter Welch | January 20, 2022 | Business, Financial Services | 0 Comments
Ten Critical Factors in Getting Your Business Off to a Fresh Start in 2022 (Part 2 of 3)
by Carter Welch | January 13, 2022 | Business, Financial Services | 0 Comments
2022: Resolve to Give Your Business a Fresh Start to Begin the Year (Part 1 of 3)
by Carter Welch | January 6, 2022 | Business, Financial Services | 0 Comments
Year End Wrap Up
by Zane Stevens | December 29, 2021 | Business | 0 Comments
Protea Conversations: Diana Maier
by Diana Maier | December 22, 2021 | Business, Financial Services, Protea Conversations | 0 Comments
CALIFORNIA – NEW EMPLOYMENT LAWS in 2022
by Diana Maier and Marta Manus | December 16, 2021 | Business, Financial Services | 0 Comments
Protecting Your Small Business from Cyber-attacks …and Developing a Stronger Approach to Cybersecurity in 2022
by John Comfort | December 9, 2021 | Accounting, Bookkeeping, Bookkeeping Software, Business, Outsourced Accounting, Wine Industry | 0 Comments
A Thankful Message from Protea Financial Director Zane Stevens
by Zane Stevens | November 24, 2021 | Business | 0 Comments
What is a W-2?
by Zane Stevens | November 18, 2021 | Accounting, Bookkeeping, Business, Financial Services, Outsourced Accounting, Tax | 0 Comments
Protea Conversations: Rae Paulson
by Rae Paulson | November 11, 2021 | Protea Conversations | 0 Comments
Advantages of a Virtual Bookkeeper Over a Physical Bookkeeper
by Zane Stevens | November 4, 2021 | Accounting, Bookkeeping, Business, Financial Services, Outsourced Accounting | 0 Comments
The Benefits of Hiring a Bookkeeper with QuickBooks Experience
by Zane Stevens | October 28, 2021 | Bookkeeping, Financial Services, Outsourced Accounting, Wine Industry | 0 Comments
Protea Conversations: Wilder Clements
by Wilder Clements | October 21, 2021 | Protea Conversations | 0 Comments
Options If You Want To Move Away From Paper Checks
by Zane Stevens | October 14, 2021 | Bookkeeping, Financial Services, Outsourced Accounting, Wine Industry | 0 Comments
What is Gross Margin and Why is it Important?
by Zane Stevens | October 7, 2021 | Bookkeeping, Outsourced Accounting, Wine Industry | 0 Comments
What Makes Wine Accounting Complicated?
by Zane Stevens | September 30, 2021 | Bookkeeping, Outsourced Accounting, Wine Industry | 0 Comments
Protea Conversations: Yuko Tsuchida
by Yuko Tsuchida | September 23, 2021 | Protea Conversations | 0 Comments
Cut Your Winery’s Operating Costs with a Winery Bookkeeper
by Zane Stevens | September 16, 2021 | Bookkeeping, Outsourced Accounting, Wine Industry | 0 Comments
Starting with a Budget Can Help New Wineries Succeed
by Zane Stevens | September 9, 2021 | Accounting, Bookkeeping, Financial Services, Wine Industry | 0 Comments
Don’t Let Accounting Problems Sour Your Wines: Avoiding Common Accounting Issues
by Zane Stevens | September 2, 2021 | Accounting, Business, Wine Industry | 0 Comments
Accounting Tips to Improve Your Knowledge
by Zane Stevens | August 26, 2021 | Accounting | 0 Comments
How Can Bill.Com Reduce Your Processing Time?
by Zane Stevens | August 19, 2021 | Accounting, Bookkeeping, Bookkeeping Software | 0 Comments
Protea Conversations: Carolyn Sweeney
by Carolyn Sweeney | August 12, 2021 | Protea Conversations | 0 Comments
Taking Care of Business: Hiring the Right Accounting Bookkeeping Service
by Zane Stevens | August 5, 2021 | Accounting, Bookkeeping, Outsourced Accounting | 0 Comments
Tips To Avoid A Cash Crunch: 3 Ideas For Cash Flow Management
by Zane Stevens | July 22, 2021 | Accounting, Bookkeeping, Business, Financial Services | 0 Comments
De-Risking a Business to Drive Enterprise Value
by Joe Orlando | July 15, 2021 | Business, Financial Services, Insurance | 0 Comments
Accounting Software: Control Your Finances With Confidence and Ease
by Zane Stevens | July 8, 2021 | Accounting, Bookkeeping, Bookkeeping Software | 0 Comments
Get a Full Picture of Your Business with Accrual Accounting
by Zane Stevens | July 1, 2021 | Accounting | 0 Comments
Outsourcing Accounting Services: Increase Your Bottom Line
by Zane Stevens | June 24, 2021 | Accounting, Outsourced Accounting | 0 Comments
Protea Conversations: Tracey Welch
by Tracey Welch | June 17, 2021 | Protea Conversations | 0 Comments
Property Insurance in the Wine Industry
by Zane Stevens | June 10, 2021 | Wine Industry | 0 Comments
How to understand your balance sheet: A beginner’s guide
by Zane Stevens | June 3, 2021 | Accounting, Bookkeeping, Business, Financial Services, Outsourced Accounting | 0 Comments
Protea Conversations: Alicia Cronbach
by Alicia Cronbach | May 27, 2021 | Protea Conversations | 0 Comments
Your Account Reconciliation is Now a Fun Activity
by Zane Stevens | May 20, 2021 | Accounting, Bookkeeping, Business, Financial Services | 0 Comments
QuickBooks Beginner Mistakes You Must Avoid
by Zane Stevens | May 13, 2021 | Bookkeeping, Bookkeeping Software | 0 Comments
Winery Adaptation
by Mark Evans | May 6, 2021 | Wine Industry | 0 Comments
Financial Forecasting 101
by Zane Stevens | April 29, 2021 | Accounting, Bookkeeping, Business, Financial Services, Outsourced Accounting | 0 Comments
Protea Conversations – Rachel Martin
by Rachel Martin | April 22, 2021 | Business, Wine Industry | 0 Comments
5 Financial Reports You Should be Running
by Zane Stevens | April 15, 2021 | Bookkeeping, Business, Financial Services | 0 Comments
Protea Conversations: April Gargiulo
by April Gargiulo | April 9, 2021 | Protea Conversations, Uncategorized | 0 Comments
7 thoughts for 7 years
by Zane Stevens | April 1, 2021 | Business | 0 Comments
The Basics of Financial Statements
by Zane Stevens | March 25, 2021 | Accounting, Bookkeeping, Business, Financial Services | 0 Comments
Protea Conversations: Destiny Burns
by Destiny Burns | March 18, 2021 | Accounting, Protea Conversations, Wine Industry | 0 Comments
5 Key Elements Influencing the Accounting and Finance Hiring Environment in 2021
by Carolyn Sweeney | March 11, 2021 | Accounting, Business, Financial Services | 0 Comments
Thank You From Protea Financial: This Is Just the Beginning
by Zane Stevens | March 1, 2021 | Business | 0 Comments
Protea Conversations: Nastassia Lopez
by Nastassia Lopez | February 25, 2021 | Outsourced Accounting, Protea Conversations | 0 Comments
Accrual Accounting vs. Cash Accounting – What’s the Difference?
by Zane Stevens | February 18, 2021 | Accounting | 0 Comments
Why You Should Hire a Bookkeeper
by Zane Stevens | February 11, 2021 | Bookkeeping, Wine Industry | 0 Comments
Protea Conversations: Suzanne Briel
by Suzanne Briel | January 28, 2021 | Protea Conversations | 0 Comments
How to Calculate the Cost of Making Wine
by Zane Stevens | January 21, 2021 | Accounting, Outsourced Accounting, Wine Industry | 0 Comments
Financial Forecasting and Cash Flow Planning
by Zane Stevens | January 14, 2021 | Accounting, Bookkeeping, Financial Services, Outsourced Accounting | 0 Comments
The Property Insurance Marketplace for Wineries
by Chet Laws | January 7, 2021 | Wine Industry | 0 Comments
Businesses Need to Do These Four Things Before 2021
by Zane Stevens | December 14, 2020 | Business, Financial Services | 0 Comments
How to Grow Your Business Through Accounting Outsourcing
by Zane Stevens | November 19, 2020 | Accounting, Business, Outsourced Accounting | 0 Comments
Bookkeeping Basics for Small Business – Why Bookkeeping Matters
by Zane Stevens | October 28, 2020 | Bookkeeping, Business | 0 Comments
5 Tips for Improving Your Small Business’s Financial Health
by Zane Stevens | March 23, 2023 | Business, Financial Services, Wine Industry | 0 Comments
Protea Conversations: Jeremy Little
by Zane Stevens | March 16, 2023 | Business, Protea Conversations | 0 Comments
Succession Planning – Preparing to Buy Or Sell
by Jeremy Little | March 9, 2023 | Business, Financial Services, Wine Industry | 0 Comments
Request An Evaluation
If you are ready for real change in how you use your most valuable assets - time & money, fill out the form and an account manager will reach out to you right away.