Texas craft beer distributors received an early Christmas present in 2017. On December 15, 2017, the Texas Court of Appeals for the Third District, at Austin issued an opinion in Texas Alcoholic Beverage Commission v. Live Oak Brewing Co., et al. (NO. 03-16-00786-CV) in which the court overturned a lower court’s determination that a statute prohibiting self-distributing brewers from selling the distribution rights to their products was unconstitutional under the Texas Constitution. (more…)
On December 15, 2017, a Mississippi trial court issued a series of orders dismissing a substantial number of the claims brought in Rex Distributing Company v. Anheuser-Busch et al., 2nd Cir. Court No. 24C11:17-cv-00033 (Harrison Circuit Court – Gulfport).
In 2016, Mississippi beer distributor Rex Distributing (Rex) agreed to sell its business to Adams Beverage (Adams) for $50.5 million. Anheuser-Busch (A-B)—by far Rex’s largest supplier—then exercised the “match and redirect” right contained in the distribution agreement between A-B and Rex, directing Rex to sell its business to Mitchell Distributing (Mitchell) on the same terms and conditions as the proposed Rex-Adams transaction. D.G. Yuengling and Son (Yuengling) refused to allow the sale of its brand distribution rights in Rex’s territory to Mitchell, citing Mitchell’s previous refusal to carry Yuengling beer when Yuengling first entered the state. Rex consummated the sale to Mitchell for $3.1 million less than the original sale price due to Yuengling’s refusal to go along. Rex then brought suit against A-B, Yuengling, and several Mitchell entities, and Yuengling filed cross-claims against A-B and Mitchell. (more…)
This post does not constitute tax advice. It summarizes changes in alcohol beverage excise tax laws to assist industry members in planning to implement the changes. Excise tax calculations and liability must be determined for each taxpayer based on numerous variables.
The new tax law formerly referred to as the Tax Cuts and Jobs Act of 2017, provides a temporary reduction in alcohol beverage excise taxes for US brewers, winemakers, distillers and beverage importers. Temporary tax relief is available for beer, wine and spirits removed from a US manufacturing facility or released from Custom’s custody after January 1, 2018, and prior to December 31, 2019. Several provisions of the new law will require the Alcohol and Tobacco Tax and Trade Bureau (TTB) to quickly promulgate new regulations. (more…)
On September 29, 2017, the federal Alcohol and Tobacco Tax and Trade Bureau (TTB) issued Ruling 2017-2, which updates and supersedes older agency guidance on allowable returns of beer and malt beverage products that contain “pull dates” or other indicators of product freshness.
The Federal Alcohol Administration (FAA) Act includes a general prohibition on “consignment sales,” 27 USC 205(d). Congress believed that all transactions should be “bona fide” sales. Id. The intent was to prevent a wide range of unscrupulous practices that might occur if manufacturers and wholesalers furnishing alcohol beverages to retailers on consignment or with the right of return.
The FAA Act prohibition on consignment sales does not apply to “transactions involving solely the bona fide return of merchandise for ordinary and usual commercial reasons arising after the merchandise has been sold.” Id. TTB regulations provide an extensive list of reasons that a manufacturer or wholesaler can accept returns. 27 CFR, Part 11, Subpart D. (more…)
Last week, the Texas Alcoholic Beverage Commission (“TABC”) circulated a draft amendment of Texas’ name and address labeling regulation for “malt beverages” (beer). A copy of the proposed amended regulation (with a redline of the changes) is can be found here.
Consistent with TTB regulations on name and address labeling for malt beverages, the current regulation requires only the name and address of the importer, with foreign producer information optional. The revised regulation, in contrast, requires:
On labels of containers of imported malt beverages, the name and principal place of business of the foreign manufacturer, bottler or shipper must be stated
The proposed regulation accordingly marks a significant Texas departure from federal labeling rules. First, it requires foreign producer information on the label. Second, it requires the label to show the name and principal place of business address of the foreign producer. This could require substantial changes to the labels of malt beverages sold in Texas.
The TABC is scheduled to hold a hearing in Austin on its proposed new regulation on Friday, March 10, 2017.
On January 4, 2017 TTB published in the Federal Register a temporary rule, T.D. TTB–146, modifying the tax filing timeframe for taxpayers who fall below a certain monetary threshold and removing the bond requirements for certain eligible taxpayers who pay taxes below certain maximum amounts on distilled spirits, wine and beer. See 82 Fed. Reg. 1108 (Jan. 4, 2017). Congress mandated these changes when it enacted the PATH Act in December 2015, and the changes became effective on January 1, 2017. The temporary rule involves two primary changes:
Taxpayers who do not reasonably expect to be liable for more than $1,000 in alcohol excise taxes (for distilled spirits, wine and beer) in the calendar year and were not liable for more than $1,000 in the prior year can pay their taxes annually rather than quarterly or semi-monthly. If a taxpayer has multiple locations, the $1,000 threshold applies to the combined total. A taxpayer must select the return period on its return.
Taxpayers who do not reasonably expect to be liable for more than $50,000 in alcohol excise taxes (for distilled spirits, wine and beer) in the calendar year and were not liable for more than $50,000 in the prior year are exempt from filing bonds to cover operations or withdrawals. In order to take advantage of this exemption, the taxpayer must notify TTB of its eligibility and receive TTB approval. New applicants will do this during the initial application process and existing taxpayers can do so through an amendment to their registration or brewer’s notice. Ironically, the bond exemption does not apply to taxpayers that conduct operations or withdrawals of wine or spirits for industrial (as opposed to beverage) use.
TTB has issued additional guidance on the PATH Act’s impact in Industry Circular 2016–2 (Dec. 30, 2016).
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