Sec. 13809. Reduced rate of excise tax on certain distilled spirits
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Section 5001 is amended by redesignating subsection
(c)as subsection
(d)and by inserting after subsection
(b)the following new subsection: In the case of a distilled spirits operation, the otherwise applicable tax rate under subsection (a)(1) shall be— $2.70 per proof gallon on the first 100,000 proof gallons of distilled spirits, and $13.34 per proof gallon on the first 22,130,000 of proof gallons of distilled spirits to which subparagraph
(A)does not apply, which have been distilled or processed by such operation and removed during the calendar year for consumption or sale, or which have been imported by the importer into the United States during the calendar year. In the case of a controlled group, the proof gallon quantities specified under subparagraphs
(A)and
(B)of paragraph
(1)shall be applied to such group and apportioned among the members of such group in such manner as the Secretary or their delegate shall by regulations prescribe. For purposes of subparagraph (A), the term controlled group shall have the meaning given such term by subsection
(a)of section 1563, except that more than 50 percent shall be substituted for at least 80 percent each place it appears in such subsection. Under regulations prescribed by the Secretary, principles similar to the principles of subparagraphs
(A)and
(B)shall be applied to a group under common control where one or more of the persons is not a corporation. Pursuant to rules issued by the Secretary, two or more entities (whether or not under common control) that produce distilled spirits marketed under a similar brand, license, franchise, or other arrangement shall be treated as a single taxpayer for purposes of the application of this subsection. This subsection shall not apply to distilled spirits removed after December 31, 2019. . Section 7652(f)(2) is amended by striking section 5001(a)(1) and inserting subsection (a)(1) of section 5001, determined as if subsection (c)(1) of such section did not apply . Subsection
(c)of section 5001 , as added by subsection (a), is amended— in paragraph (1), by inserting but only if the importer is an electing importer under paragraph
(3)and the proof gallons of distilled spirits have been assigned to the importer pursuant to such paragraph after into the United States during the calendar year , and by adding at the end the following new paragraph: In the case of any proof gallons of distilled spirits which have been produced outside of the United States and imported into the United States, the rate of tax applicable under paragraph
(1)(referred to in this paragraph as the reduced tax rate ) may be assigned by the distilled sprits operation (provided that such operation makes an election described in subparagraph (B)(ii)) to any electing importer of such proof gallons pursuant to the requirements established by the Secretary under subparagraph (B). The Secretary shall, through such rules, regulations, and procedures as are determined appropriate, establish procedures for assignment of the reduced tax rate provided under this paragraph, which shall include— a limitation to ensure that the number of proof gallons of distilled spirits for which the reduced tax rate has been assigned by a distilled spirits operation— to any importer does not exceed the number of proof gallons produced by such operation during the calendar year which were imported into the United States by such importer, and to all importers does not exceed the 22,230,000 proof gallons of distilled spirits to which the reduced tax rate applies, procedures that allow the election of a distilled spirits operation to assign and an importer to receive the reduced tax rate provided under this paragraph, requirements that the distilled spirits operation provide any information as the Secretary determines necessary and appropriate for purposes of carrying out this paragraph, and procedures that allow for revocation of eligibility of the distilled spirits operation and the importer for the reduced tax rate provided under this paragraph in the case of any erroneous or fraudulent information provided under clause
(iii)which the Secretary deems to be material to qualifying for such reduced rate. For purposes of this section, any importer making an election described in subparagraph (B)(ii) shall be deemed to be a member of the controlled group of the distilled spirits operation, as described under paragraph (2). For purposes of this paragraph, in the case of a controlled group, rules similar to section 5051(a)(5)(B) shall apply. . The amendments made by this section shall apply to distilled spirits removed after December 31, 2017.