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U.S. Treasury Nixes “Excise Drawbacks” For Alcohol Producers

December 19, 2018

Wine and spirits producers are set to see a key tax break eliminated, with the U.S. Treasury Department moving to close what it sees as a loophole for drinks importers. Previously, producers have been allowed to use so-called “excise drawbacks” to recoup taxes, duties, and fees on imported products after exporting similar products.

The Distilled Spirits Council of the U.S. and other key industry groups say the excise drawbacks were explicitly included by Congress in the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) to encourage the growth of U.S. exports. The Treasury Department, however, sees an opportunity to gain revenue from eliminating the excise drawbacks, which it claims amount to a tax break on imported products.

“Congress wanted to encourage production in the United States with duty drawback, which was designed to incentivize U.S. manufacturers to export,” said Distilled Spirits Council president and CEO Chris Swonger. “At a time when retaliatory tariffs are impacting American business, small and large, this program could provide some relief, simplification, and add to our competitiveness. Treasury needs to follow Congressional intent and stop impeding a program that levels the playing field for U.S. manufacturers in the global market.”—Daniel Marsteller

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