Things are looking good for a major update coming for US wineries related to their excise taxes, 5120.17 report, and wine labels. The bill very appropriately named the wine excise tax modernization act currently under review by congress and now with the support of Congressman Mike Thompson if passed will change the alcohol percentage range on the Table wine tax class.
Currently this still wine tax class covers an alcohol content range of wines from 7 to 14%. (*remember- this means that your wine’s alcohol content would round to 14.0%) With the passing of this bill the range would take a dramatic change to the upper end being 16%. This 2 decimal point change means big things for the majority of US wineries.
- It will take a chunk off their TTB excise tax bill. For a winery whose standard practice is to make wines that are always below 16% alcohol (remember- that means rounding to 16.0%) this will mean that instead of paying the higher $1.57 gallon current rate on any of their wines over 14% alcohol, they will now pay all their TTB excise taxes at the lower, “table wine” rate of $1.07/gallon. Now also add in paying their excise taxes under the small producers tax credit and the two will add up to hundreds or thousands of dollars in savings per year for most US wineries.
- It will change the way they maintain their required winemaking records, specifically their bulk and bottled wine inventory summaries of all wines they keep at their winery site. Currently wineries are required to be maintaining inventory summaries of all the bulk and bottled wine they store on site, and those summaries are required to track each lot of wine by it’s alcohol content, or TTB tax class.
- It will change how they complete their required report of wine premise operations, or 5120.17 report. On this report, like the above mentioned inventory summaries wineries report their winemaking activity numbers based on the alcohol content (tax class) of their wines. For any winery that has been completing this report manually will mean they’ll need to shift how they’ve been keeping track of their wine inventories by alcohol content to then be able to fill out this report per the updated alcohol content ranges of their wines. For wineries which use wine production database software to maintain their wine inventories and generate their TTB 5120.17 reports, the responsibility will fall mostly to their software providers to make the updates.
- It will change how they label their wines, specific to the alcohol content. Right now if a winery lists an alcohol content that falls in the table wine tax class (from 7 to 14.0%) then the actual alcohol percentage of that wine may only be within plus or minus 1.5%, without going over 14.0%. So if their label lists 13.5%, that currently means that if the TTB tested that wine for the alcohol content it would have to come back in the range from 12.0 to 14.0% to be in compliance. Now with this proposed change to the table wine’s alcohol range wineries will have more room to take advantage of in the plus or minus 1.5% tolerance range.
I definitely feel that this update to the table wine tax class has been needed for almost two decades now, so I’m glad to see this act at the final stage before becoming reality for TTB winery permit holders.
Stay tuned for more details on when this change would take effect if the bill passes.