Implementation of Refund Procedures for Craft Beverage Modernization Act Federal Excise Tax Benefits Applicable to Imported Alcohol, 58021-58035 [2022-20412]

Agencies

• Alcohol and Tobacco Tax and Trade Bureau
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 87, Number 184 (Friday, September 23, 2022)]
[Rules and Regulations]
[Pages 58021-58035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20412]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Parts 26 and 27

[Docket No. TTB-2022-0009; T.D. TTB-186; Re: Notice No. 186]
RIN 1513-AC89


Implementation of Refund Procedures for Craft Beverage 
Modernization Act Federal Excise Tax Benefits Applicable to Imported 
Alcohol

AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION: Temporary rule; Treasury decision.

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SUMMARY: This temporary rule amends the Alcohol and Tobacco Tax and 
Trade Bureau (TTB) regulations to implement certain changes made to the 
Internal Revenue Code by the Taxpayer Certainty and Disaster Tax Relief 
Act of 2020 (Tax Relief Act), which amended the Craft Beverage 
Modernization Act (CBMA) provisions of the Tax Cuts and Jobs Act of 
2017. The Tax Relief Act transfers responsibility for administering 
CBMA provisions regarding reduced tax rates and tax credits on imported 
alcohol from U.S. Customs and Border Protection (CBP) to the U.S. 
Department of the Treasury, effective January 1, 2023. Beginning on 
that date, importers will pay the full tax rate at entry and 
subsequently submit refund claims to TTB to receive the lower rates. 
This rule establishes procedures for industry members to take advantage 
of reduced tax rates and tax credits that may be applied to specified 
limits of imported alcohol products that are entered for consumption in 
the United States beginning on January 1, 2023. These regulations 
establish the procedures by which foreign producers

[[Page 58022]]

may assign the reduced tax rates and tax credits to importers and the 
procedures by which such importers may receive the assignments and 
submit refund claims to TTB. TTB is soliciting comments from all 
interested parties on these amendments through a notice of proposed 
rulemaking published elsewhere in this issue of the Federal Register.

DATES: 
    Effective date: This temporary rule is effective October 24, 2022.
    Comment due date: Comments on the proposed rule must be received on 
or before November 22, 2022. See the Public Participation section of 
the SUPPLEMENTARY INFORMATION for information on how to comment on the 
proposed rule.

FOR FURTHER INFORMATION CONTACT: Jesse Longbrake, Regulations and 
Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G 
Street NW, Box 12, Washington, DC 20005; telephone (202) 453-1039, 
extension 066.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
    A. Transition to Refunds in Lieu of Reduced Tax Rates and Tax 
Credits for Imported Alcohol
    B. TTB Authority
II. Overview of Temporary Regulations
    A. Foreign Producer Registration
    B. Foreign Producer Assignment of CBMA Tax Benefits
    C. Importer Product Entry and Refund Claims Procedures
    D. Procedures for Revocation of Eligibility
III. Public Participation
IV. Regulatory Analyses and Notices
    A. Executive Order 12866
    B. Regulatory Flexibility Act
    C. Paperwork Reduction Act
    D. Inapplicability of Prior Notice and Comment

I. Background

A. Transition to Refunds in Lieu of Reduced Tax Rates and Tax Credits 
for Imported Alcohol

    This temporary rule amends the Alcohol and Tobacco Tax and Trade 
Bureau (TTB) regulations to implement changes to the Internal Revenue 
Code of 1986 (IRC) pursuant to the Taxpayer Certainty and Disaster Tax 
Relief Act of 2020 (``Tax Relief Act''). The principal regulatory 
changes establish procedures for taking advantage of reduced tax rates 
and tax credits established under the Craft Beverage Modernization Act 
(CBMA) (collectively, ``tax benefits'' or ``CBMA tax benefits'') for 
imported alcohol products entered for consumption \1\ in the United 
States beginning in 2023. These CBMA tax benefits were first made 
available in 2018, through the Tax Cuts and Jobs Act (Pub. L. 115-
97).\2\
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    \1\ This temporary rule implements statutory tax refund 
provisions that apply to imported products ``removed'' after 
December 31, 2022. See 26 U.S.C. 5001(c)(4), 5041(c)(7), and 
5051(a)(6)). TTB regulations at 27 CFR 27.48 provide that any 
internal revenue taxes payable on imported distilled spirits, wines, 
and beer upon release from customs custody are collected, accounted 
for, and deposited as internal revenue collections by U.S. Customs 
and Border Protection (CBP) in accordance with CBP requirements. 
There are different types of entry under CBP regulations, and 
``entered for consumption'' refers to a type of customs entry filed 
to introduce the goods into the stream of U.S. commerce. Such 
entries are subject to applicable tax and duties. Accordingly, 
consistent with TTB regulations and CBP policies, TTB interprets the 
term ``removed'' as used in the CBMA tax refund statutory provisions 
for imported products to mean ``entered for consumption.'' For 
purposes of this temporary rule, ``entered for consumption'' 
includes withdrawal from a CBP bonded warehouse for consumption.
    \2\ The ``Craft Beverage Modernization and Tax Reform Act.'' 
These statutory provisions apply to beverage and non-beverage 
alcohol. See Public Law 115-97, sections 13801-13808 (CBMA 
provisions of the law commonly known as the Tax Cuts and Jobs Act).
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    The CBMA provisions of the Tax Cuts and Jobs Act provided limited 
tax benefits to domestic and foreign producers of distilled spirits, 
wine, and beer. Domestic industry members are eligible for CBMA tax 
benefits when they pay tax to TTB. Foreign producers must assign the 
applicable tax benefits to importers, who then may elect to take them. 
Since 2018, U.S. Customs and Border Protection (CBP) has administered 
the provisions for imported alcohol, and established procedures for the 
foreign producer to assign tax benefits to importers, as well as for 
the importers to receive the benefits and apply them at the time of 
entry. The CBMA tax benefits available to domestic and foreign 
producers are subject to controlled group limitations, which are 
described more fully later in this document. The CBMA tax benefits for 
imported alcohol products \3\ are as follows:
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    \3\ These tax benefits apply to alcohol from foreign countries 
and other areas outside of the customs territory of the United 
States (as defined in 19 CFR 101.1) that is imported into the United 
States (as defined at 26 U.S.C. 7701(a)(9) as the 50 States and the 
District of Columbia) and entered for consumption subject to tax. 
Foreign producers may not assign tax benefits to domestic distilled 
spirits plants, bonded wine cellars, or breweries that receive bulk 
distilled spirits, natural wine, or beer that is withdrawn without 
payment of tax from customs custody for transfer to their bonded 
premises under 26 U.S.C. 5232, 5364, or 5418.
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     Each foreign distilled spirits operation receives tax 
benefits in the form of reduced tax rates that they may assign to 
importers. The benefits apply to the first 22,230,000 proof gallons of 
that foreign producer's product imported into the United States in a 
calendar year. These rates are, for each foreign producer, $2.70 per 
proof gallon on the first 100,000 proof gallons imported, and $13.34 
per proof gallon on the next 22.13 million proof gallons imported into 
the United States.
     Each foreign wine producer receives tax benefits in the 
form of tax credits that they may assign to importers. The benefits 
apply to the first 750,000 wine gallons of that producer's production 
imported into the United States in a calendar year. The credits are, 
for each foreign producer, $1 per wine gallon on the first 30,000 wine 
gallons of wine imported, 90 cents on the next 100,000 wine gallons 
imported, and 53.5 cents on the next 620,000 wine gallons imported. The 
tax credits apply to all wine tax rates,\4\ except that CBMA provides 
for adjusted credits for imported wine eligible for the hard cider tax 
rate (6.2 cents, 5.6 cents, and 3.3 cents, respectively).
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    \4\ Wine tax rates vary based on a number of factors such as 
alcohol and carbonation content. See 26 U.S.C. 5041.
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     Each foreign brewer receives tax benefits in the form of a 
reduced tax rate of $16 per barrel. These tax benefits may be assigned 
to importers for the first 6,000,000 barrels produced by that foreign 
producer and imported into the United States in a calendar year.
    These CBMA tax benefits applied to calendar years 2018 and 2019, 
and were subsequently extended and finally made permanent through the 
Tax Relief Act.\5\ In making these tax benefits permanent, this Act 
also transferred responsibility for administering the CBMA tax benefits 
for imported alcohol from CBP to the Department of the Treasury 
(Treasury).\6\ Consequently, beginning January 1, 2023, importers must 
pay the full tax rate \7\ on imported alcohol products to

[[Page 58023]]

CBP and then subsequently submit refund claims for the difference 
between the tax paid at the full rate and the amount that would have 
been paid if tax liability had been calculated using the tax benefits 
foreign producers assigned to them. These regulations establish the 
procedures by which foreign producers assign the CBMA tax benefits to 
importers and the procedures by which such importers receive the 
foreign producer's assignment and submit refund claims to TTB.
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    \5\ See Public Law 115-97, sections 13801-13808 (CBMA provisions 
of the law commonly known as the Tax Cuts and Jobs Act); Public Law 
116-94, section 144 (Further Consolidated Appropriations Act, 2020 
extending and amending CBMA provisions); Public Law 116-260, 
Division EE, sections 106-110 (Tax Relief Act of 2020 making CBMA 
provisions permanent with amendments).
    \6\ See Section 107(e) & (f) of the Tax Relief Act of 2020 (Pub. 
L. 116-260, Division EE) (134 Stat. 3048). Paragraph (e) reads, 
``The Secretary of the Treasury (or the Secretary's delegate within 
the Department of the Treasury) shall implement and administer 
sections 5001(c)(4), 5041(c)(7), and 5051(a)(6) of the Internal 
Revenue Code of 1986, as added by this Act, in coordination with the 
United States Customs and Border Protection of the Department of 
Homeland Security.'' Paragraph (f) reads, ``The Secretary of the 
Treasury (or the Secretary's delegate within the Department of the 
Treasury) shall prescribe such regulations as may be necessary or 
appropriate to carry out the purposes of this section. . . .''
    \7\ Here the ``full tax rate'' refers to the tax rate applicable 
without taking into account any reduced rates or credits available 
under CBMA; importers of distilled spirits will still be able to pay 
a reduced rate to CBP based on eligible wine or flavor content 
pursuant to 27 CFR 27.76 and 27.77.
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    These temporary regulations set forth the procedures under which 
foreign distilled spirits operations, wine producers, and brewers 
(collectively ``foreign producers'') may elect to assign CBMA tax 
benefits to importers and the procedures by which importers may elect 
to receive the assignments and file refund claims with TTB to receive 
those benefits starting in 2023. Generally, these provisions: (1) 
require foreign producers to register with TTB prior to assigning tax 
benefits to importers; (2) establish the information foreign producers 
must submit in order to register and assign those benefits; and (3) 
establish the information that importers must provide to claim a refund 
based on the foreign producer's assignment of tax benefits to them. The 
information the importers must provide includes information the 
importer will generally submit through CBP's Automated Commercial 
Environment (ACE) as part of the entry summary,\8\ as well as 
information the importer submits directly to TTB with the claim.
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    \8\ TTB understands that the vast majority of importers file 
entry and entry summary data electronically in ACE. As explained 
below, the electronic submission of import data in ACE is a 
prerequisite for using TTB's CBMA importer claims interface.
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    The temporary regulations also include provisions to implement 
statutory limitations on the CBMA tax benefits. For example, the CBMA 
tax benefits available for assignment by foreign producers are subject 
to controlled group limitations that apply to producers under common 
ownership. See 26 U.S.C. 5001(c)(3)(C), 5041(c)(3), and 5051(a)(5)(B). 
Accordingly, the temporary regulations require foreign producers to 
either attest that they are not under common ownership with other 
alcohol producers or to provide details about their owners when 
registering with TTB, as authorized by 26 U.S.C. 6038E.\9\ The 
temporary regulations also address the statutory provisions that 
provide for revoking the eligibility of foreign producers to assign and 
importers to receive CBMA tax benefits due to the foreign producer's 
submission of erroneous or fraudulent information that is material to 
qualifying for CBMA tax benefits. See 26 U.S.C. 5001(c)(3)(B)(iv), 
5041(c)(6)(B)(iv), and 5051(a)(4)(B)(4). These provisions are discussed 
in detail in section II of this document.
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    \9\ See 26 U.S.C. 6038E (authorizing Treasury to require that 
foreign producers provide information related to a foreign 
producer's assignment of CBMA tax benefits to importers, including 
information about a foreign producer's controlled group structure).
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    TTB will administer the CBMA import refund program through two 
components of an online system, ``myTTB,'' \10\ as described in the 
Treasury Department's, ``Report to Congress on Administration of Craft 
Beverage Modernization Act Refund Claims for Imported Alcohol,'' dated 
June, 2021.\11\ Using the online system, foreign producers will 
register, receive a TTB-issued Foreign Producer ID, and assign the CBMA 
tax benefits to importers. The importers will use the online system to 
elect to receive CBMA tax benefits assigned to them by foreign 
producers, and to submit refund claims based on those assignments and 
the information submitted by the importers themselves through ACE in 
connection with entries that are subject to CBMA claims.
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    \10\ TTB is currently engaged in a multiyear initiative to 
develop and deploy ``myTTB,'' a single, online interface for all 
industry transactions with TTB, including permit, label, and formula 
applications, as well as tax filings, payments, and claims. When 
complete, myTTB will provide both industry and TTB with online 
access to a consolidated view of an industry member's records, 
approvals, and filings.
    \11\ Available at https://www.ttb.gov/images/pdfs/treasury-cbma-import-claims-report-june-2021.pdf.
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B. TTB Authority

    TTB regulates, among other things, the importation of distilled 
spirits, wine, and malt beverages \12\ pursuant to the Federal Alcohol 
Administration Act (FAA Act). TTB also administers the provisions of 
the IRC with respect to the taxation of domestically produced distilled 
spirits, wine, and beer.\13\
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    \12\ The terms ``distilled spirits'' and ``wine,'' when used in 
the context of the FAA Act, apply only to distilled spirits and wine 
for nonindustrial use, and ``wine'' is further defined under the FAA 
Act as containing ``not less than 7 percent'' alcohol by volume. See 
27 CFR 1.10. Additionally, the FAA Act defines ``malt beverage'' as 
``a beverage made by the alcoholic fermentation of an infusion or 
decoction, or combination of both, in potable brewing water, of 
malted barley with hops, or their parts, or their products, and with 
or without other malted cereals, and with or without the addition of 
unmalted or prepared cereals, other carbohydrates or products 
prepared therefrom, and with or without the addition of carbon 
dioxide, and with or without other wholesome products suitable for 
human food consumption.'' Id.
    \13\ Under the IRC, alcohol subject to tax as ``distilled 
spirits'' includes both beverage and industrial spirits, as well as 
wine that contains more than 24 percent alcohol by volume. See 26 
U.S.C. 5001(a)(1) and (3). Alcohol subject to tax as ``wine'' 
includes wine containing up to 24 percent alcohol by volume. The IRC 
defines ``beer'' as ``beer, ale, porter, stout, and other similar 
fermented beverages (including sake or similar products) of any name 
or description containing one-half of 1 percent or more of alcohol 
by volume, brewed or produced from malt, wholly or in part, or from 
any substitute therefor.'' See 26 U.S.C. 5052(a). References to 
``beer,'' ``wine'' and ``distilled spirits'' in TTB's IRC 
regulations refer to those terms as they are defined in the IRC.
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    The FAA Act requires a TTB permit before engaging in certain 
activities related to distilled spirits, wine, and malt beverages, 
including importation. See 27 U.S.C. 203(a). Section 203(a) provides 
that it shall be unlawful, except pursuant to a ``basic permit,'' to 
engage in the business of importing into the United States distilled 
spirits, wine, or malt beverages. Section 203(a) also states that it is 
unlawful for any person so engaged to sell, offer or deliver for sale, 
contract to sell, or ship, in interstate or foreign commerce, directly 
or indirectly or through an affiliate, imported distilled spirits, 
wine, or malt beverages without a basic permit. Because many--but not 
all--alcohol products that are subject to tax under the IRC fall under 
the FAA Act definitions of distilled spirits, wine, and malt beverages, 
most--but not all--alcohol importers are required to obtain a TTB 
importer's basic permit under the FAA Act.\14\
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    \14\ Importers of industrial alcohol, wine under 7 percent 
alcohol by volume, or beer that is not a ``malt beverage'' may 
engage in the business of importing such alcohol without an FAA Act 
basic permit.
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    Chapter 51 of the IRC pertains to the taxation and regulation of 
distilled spirits (including spirits used for both beverage and 
nonbeverage purposes), wine, and beer. The IRC imposes a Federal excise 
tax on all distilled spirits, wine, and beer manufactured in or 
imported into the United States. See 26 U.S.C. 5001, 5041, and 5051, 
respectively. The tax on distilled spirits, wine, and beer either 
imported from foreign countries or brought into the United States from 
beyond the customs territory of the United States, as defined in 19 CFR 
101.1, including the U.S. Virgin Islands, is generally collected by CBP 
along with any import duties as part of CBP's exercise of its delegated 
customs revenue functions.\15\ See

[[Page 58024]]

Treasury Order 100-16, ``Delegation of Authority to the Secretary of 
Homeland Security,'' dated May 23, 2003.
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    \15\ Imported bulk distilled spirts, natural wine, and beer 
withdrawn without payment of tax from customs custody and 
transferred in bond to a domestic distilled spirits plant, bonded 
wine cellar, or brewery under 26 U.S.C. 5232, 5364, and 5418 is 
outside the scope of this rule as, in those cases, the tax is 
collected from domestic industry members by TTB and not from the 
importers by CBP.
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    The IRC provides general authority to the Secretary of the Treasury 
(Secretary) to issue regulations to carry out the provisions of the 
IRC. See 26 U.S.C. 7805(a). With respect to the tax benefits available 
under CBMA to foreign producers and to importers, the IRC directs the 
Secretary to issue rules, regulations, and procedures as appropriate 
for the assignment of such tax benefits. See 26 U.S.C. 5001(c)(3), 
5041(c)(6), and 5051(a)(4). Additionally, these include procedures for 
allowing a foreign producer to assign and an importer to receive the 
CBMA tax benefits; limitations to ensure that the quantity of products 
for which a foreign producer assigns reduced rates does not exceed the 
statutory quantity limitations on such rates; requirements for foreign 
producers to provide any information the Secretary determines necessary 
and appropriate for making assignments; and procedures allowing for 
revocation of a foreign producer's eligibility to assign reduced rates 
based on erroneous or fraudulent information provided by the foreign 
producer that is material to qualifying for a reduced rate. Id. The IRC 
further provides specific authority for the Secretary to require 
foreign producers seeking to make assignments of CBMA tax benefits to 
provide information, at such time and in such manner, as the Secretary 
may prescribe, including information about the controlled group 
structure of such foreign producer. See 26 U.S.C. 6038E. An importer 
will only be allowed a refund for CBMA tax benefits if a foreign 
producer has elected to assign, and the importer has elected to 
receive, such benefits in accordance with the rules, regulations, and 
procedures. See, e.g., 26 U.S.C. 5001(c)(4)(C).
    TTB administers these IRC and FAA Act provisions pursuant to 
section 1111(d) of the Homeland Security Act of 2002, as codified at 6 
U.S.C. 531(d). In addition, the Secretary has delegated certain 
administrative and enforcement authorities to TTB through Treasury 
Order 120-01. Responsibility for collecting the excise taxes incident 
to the importation of distilled spirits, wines, and beer is vested by 
statute with the Secretary. See 26 U.S.C. 7801. Under the authority of 
the Homeland Security Act of 2002, the Secretary has delegated these 
customs revenue functions to the Secretary of Homeland Security. See 
Treasury Department Order 100-16. Accordingly, TTB regulations provide 
that such taxes are collected, accounted for, and deposited as internal 
revenue collections by CBP in accordance with CBP requirements. See 27 
CFR 27.48; see also 27 CFR 26.200(d).
    Sections 107(e) & (f) of the Tax Relief Act set forth the 
Secretary's ability to delegate the implementation, administration, and 
rulemaking authority concerning the assignment of a foreign producer's 
CBMA benefits to importers, and the claims of importers seeking to 
receive those benefits, to ``the Secretary's delegate within the 
Department of the Treasury.'' Treasury indicated in its June 2021 
``Report to Congress on Administration of Craft Beverage Modernization 
Act Refund Claims for Imported Alcohol,'' \16\ that it planned to 
delegate its authority to administer these provisions to TTB, and TTB 
was delegated such authority.
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    \16\ Available at https://www.ttb.gov/images/pdfs/treasury-cbma-import-claims-report-june-2021.pdf.
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    TTB regulations implementing the applicable provisions of chapter 
51 of the IRC are found in 27 CFR part 27. Specifically, this part 
contains requirements relative to the importation of distilled spirits, 
wine, and beer into the United States from foreign countries, including 
the information importers are required to submit upon importation and 
the records importers must keep. Regulations at 27 CFR part 26 
implement chapter 51 of the IRC as it applies to distilled spirits, 
wine, and beer brought into the United States from the U.S. Virgin 
Islands.
    TTB has authority under section 2(d) of the FAA Act, Public Law 74-
401 (1935) ``to prescribe such rules and regulations as may be 
necessary to carry out [its] powers and duties'' under the FAA Act. The 
TTB regulations at 27 CFR part 1 implement the permit requirements of 
the FAA Act.

II. Description of Temporary Regulations

    As noted above, the temporary regulations set forth in this 
document address the procedures under which foreign producers of 
alcohol products elect to assign the tax benefits available under CBMA 
to importers and under which electing foreign producers can make such 
assignments. It also addresses how such importers may elect to receive 
the assignments and claim refund of tax based on those assignments of 
CBMA tax benefits for imported alcohol products entered for consumption 
in the United States beginning in 2023. These provisions require the 
use of electronic registration and filing systems that are intended to 
streamline processing of CBMA import refund claims. The electronic 
systems are necessary for the administration of the tax benefits and 
will, to the extent possible, accelerate the approval and payment of 
valid refund claims.

A. Foreign Producer Registration

    TTB's temporary regulations require that foreign producers seeking 
to assign CBMA tax benefits to importers first register with TTB 
through an online foreign producer interface and obtain a Foreign 
Producer ID. The Foreign Producer ID will be necessary to link the 
foreign producer's assignment to the importer's associated customs 
entry data and refund claim. See, infra, section II(C).
    The foreign producer registration is also necessary to protect the 
revenue by ensuring that entities seeking to assign CBMA tax benefits 
to importers are in fact existing foreign producers and by allowing TTB 
to collect certain ownership information necessary for TTB to enforce 
controlled group rules that limit assignments when there is common 
ownership with other producers.
    Under the temporary regulations at 27 CFR 27.254, foreign producers 
will register by submitting basic identifying information for their 
business and for a point of contact at the business. This information 
includes the business name and address, as well as name, title, country 
of residence, phone number, and email address for an employee or 
individual owner of the business who can serve as a TTB point of 
contact for the foreign producer. If the individual submitting the 
foreign producer's registration information is different than this 
point of contact, the individual submitter must also provide basic 
identifying information, including the individual's name, address, 
phone number, and email address. TTB may request additional 
information, if necessary, to verify the submitter's identity.
    The submitter may be the proprietor of the foreign producer, an 
employee thereof, or any agent that the foreign producer has authorized 
to act on its behalf. The submitter (and, if different, the employee or 
individual owner of the business identified as a point of contact) must 
have authorization from the foreign producer to provide the required 
registration information, edit the foreign producer's registration 
information, designate additional persons who are also authorized by 
the foreign producer to act on the foreign producer's behalf or cancel 
the designations of authorized persons, and make assignments of

[[Page 58025]]

CBMA tax benefits, because the submitter will be able to take these 
actions in the online foreign producer interface.
    To validate the existence of the registered entity and to assist in 
preventing a single foreign producer from registering with TTB multiple 
times and making assignments to importers exceeding the statutory 
quantity limitations, the temporary regulations require foreign 
producers to submit, as part of the TTB registration, the U.S. Food and 
Drug Administration (FDA) Food Facility Registration number(s) that are 
generally reported to FDA in connection with the importation(s) into 
the United States of such producer's products.
    Additionally, the foreign producer must either attest that it does 
not share common ownership with other producers or submit identifying 
information for any individual or entity that owns 10 percent or more 
of the foreign producer being registered. As explained further below, 
this information is necessary for TTB to enforce statutory controlled 
group rules that limit assignments of CBMA tax benefits when there is 
common ownership with other producers.
    The registering foreign producer must also provide certain 
certifications attesting to the submitter's authority and the 
truthfulness of the information submitted. The foreign producer must 
also acknowledge that providing erroneous or fraudulent information may 
result in the revocation of the foreign producer's eligibility to 
assign CBMA tax benefits. See, infra, section II(D) of this document.
    Finally, the temporary regulations require registration information 
to be submitted in the English language, except an individual's name, 
the name of a company, and the name of a street may be submitted in a 
foreign language. All information, including these items, must be 
submitted using the English alphabet.
i. FDA Food Facility Registration Number
    In order to identify and prevent duplicate and fraudulent 
registrations, TTB's temporary regulations generally require 
registering foreign producers to provide the unique FDA Food Facility 
Registration number(s) that is typically reported to FDA in connection 
with the importation of the producer's products pursuant to the FDA 
prior notice regulations at 21 CFR 1.281(a)(6)(ii) implementing 21 
U.S.C. 381(m).\17\ The FDA Food Facility Registration and prior notice 
requirements carry out the Public Health Security and Bioterrorism 
Preparedness and Response Act of 2002 (the Bioterrorism Act), which 
directs the FDA, as the food regulatory agency of the Department of 
Health and Human Services, to take steps to protect the public from a 
threatened or actual terrorist attack on the U.S. food supply and other 
food-related emergencies. See Public Law 107-188, sections 301-315.
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    \17\ FDA prior notice regulations at 21 CFR 1.281(a)(6) require 
reporting of the foreign manufacturer's name, partial address, and 
FDA registration number or the name, full address, and the reason 
the registration number is not provided.
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    Foreign distilled spirits operations, wine producers, and brewers 
who produce products for consumption in the United States generally 
must register their production facilities with FDA, see 21 U.S.C. 350d; 
21 CFR 1.225, 1.227 (requirements applicable to foreign facilities that 
manufacture/process, pack, or hold food in storage for consumption in 
the United States).
    Due to the long-established FDA Food Facility Registration 
requirement and its direct application in this context, TTB is not 
requiring a separate, potentially duplicative system for validation of 
foreign producers.
    Rather, TTB's temporary regulations require the foreign producer to 
submit to TTB each FDA Food Facility Registration number that they have 
already obtained for FDA purposes prior to the importation of their 
distilled spirits, wine, or beer, into the United States. TTB believes 
requiring the Food Facility Registration numbers minimizes burden on 
foreign producers since it allows them to use identifying information 
already used for the importation of their products.
    TTB understands there are cases where a foreign distilled spirits 
operation, wine producer, or brewer does not have an FDA Food Facility 
Registration number because its products are further manufactured or 
processed (including packaging) by another foreign facility before 
shipment to the United States. See 21 CFR 1.226(a). In such cases, 
TTB's temporary regulations require the registering foreign producer to 
submit the Food Facility Registration number of the facility further 
manufacturing or processing the distilled spirits, wine, or beer. 
Because the Food Facility Registration number is already required to be 
obtained from FDA and is generally required to be submitted to FDA in 
connection with the import under FDA's regulations, TTB expects that 
the foreign producer will be able to obtain such registration number 
directly from the other foreign facility or from the importer(s) to 
whom the foreign producer intends to assign CBMA tax benefits.
    TTB also understands that a foreign producer that produces only 
alcohol for industrial use (as defined at 27 CFR 1.60 through 1.62) 
also will not have an FDA Food Facility Registration number when such 
alcohol is not reasonably expected to be directed to a food use. In 
such cases, TTB's temporary regulations provide that, in lieu of 
providing an FDA Food Facility Registration number, the foreign 
producer will certify that it does not have an FDA Food Facility 
Registration because FDA does not require one for its operations.
ii. Ownership Information
    A foreign producer's assignments of CBMA tax benefits may be 
restricted by statutory controlled group rules that limit eligibility 
for tax benefits when there is common ownership with other 
producers.\18\ It is the foreign producer's ultimate responsibility to 
ensure that it does not assign tax benefits in excess of the quantities 
allowed. However, to collect information necessary for enforcing the 
controlled group limitations in the event of noncompliance, the 
temporary regulations at new 27 CFR 27.256 require foreign producers 
who are under common ownership with other foreign or U.S. distilled 
spirits operations, wineries, or breweries also assigning CBMA tax 
benefits or taking CBMA tax benefits (if a domestic alcohol producer) 
to provide information for any individual or entity that owns 10 
percent or more of the foreign producer.
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    \18\ The IRC provides that the quantity limitations for the CBMA 
tax benefits are applied to the entire controlled group and shall be 
apportioned among the members of the controlled group. See 26 U.S.C. 
5051(a)(5)(B), 5001(c)(3)(C), and 5041(c)(3). For these purposes the 
term ``controlled group'' has meaning assigned to it by the IRC at 
26 U.S.C. 1563(a), except that the phrase ``more than 50 percent'' 
is substituted for the phrase ``at least 80 percent'' in each place 
it appears in that paragraph. Pursuant to TTB regulations, these 
controlled group principles apply to common ownership situations in 
which one or more producers is not a corporation. See 26 U.S.C. 
5001(c)(3)(C)(ii); 5041(c)(3); and 5051(a)(5)(A)-(B).
---------------------------------------------------------------------------

    Specifically, for each individual or entity with an ownership 
interest of 10 percent or more, the foreign producer must provide that 
owner's name, address, phone number, and, if the owner is a business 
entity, the owner's Employer Identification Number (EIN) issued by the 
U.S. Internal Revenue Service (for U.S. entities, and only if the 
domestic owner has an EIN) or Dun & Bradstreet Data Universal Numbering 
System (DUNS) number (for foreign entities, and only if the foreign 
owner has a DUNS).

[[Page 58026]]

    Given controlled group rules that require aggregation of certain 
ownership interests, as well as the statutory requirement to apply U.S. 
legal definitions of controlled groups to business arrangements outside 
the United States, TTB believes that requesting this information for 
those with an ownership interest of 10 percent or more is generally the 
least information necessary, reported in the most simplified and 
consistent way, to enforce controlled group limitations. Foreign 
producers whose owners do not have ownership interests in other alcohol 
producers will only be required to certify to that fact.
iii. Changes in Registration Information
    TTB's temporary regulations at new 27 CFR 27.258 require foreign 
producers who register with TTB to update their registration within 60 
days of any change to the information required as part of the original 
registration. These provisions are necessary to ensure that TTB is able 
to maintain the information necessary to timely and appropriately 
process CBMA import claims, to identify foreign producers, to take any 
appropriate enforcement action in the event of noncompliance with the 
controlled group limitations discussed above, and to prevent duplicate 
registrations. In addition, the foreign producer interface in myTTB 
will include prompts for the foreign producer to either confirm or 
update the ownership information on file with their registration. The 
foreign producer may be unable to assign CBMA tax benefits until the 
foreign producer updates its registration as required.
    TTB understands that, under FDA rules, Food Facility Registrations 
must be canceled when ownership of a food facility changes, and the new 
owner must submit a new FDA registration for the facility within 60 
days. See 21 CFR 1.234(b). If a facility goes out of business, FDA 
requires that the previous owner must cancel its FDA registration 
within 60 days. See 21 CFR 1.235.
    TTB's temporary regulations do not require a foreign producer to 
cancel its TTB registration in the event of a change in ownership, but 
do require the foreign producer to update its information, for example, 
regarding its ownership and any FDA registration, within 60 days of a 
change. Depending on the circumstances, that may mean that the foreign 
producer cancels its TTB registration to be consistent with the FDA 
requirements.
iv. Electronic Registration
    TTB temporary regulations at new 27 CFR 27.254(d) provide that 
foreign producers elect to make tax benefit assignments by registering 
with TTB electronically through myTTB. Collecting registration and tax 
benefit assignment information electronically is essential to TTB's 
administration of the CBMA importer refund program, as TTB must be able 
to validate the existence of the foreign producers, enforce controlled 
group limitations in the event of noncompliance, and ensure that 
statutory limitations on assignable tax benefit quantities are not 
exceeded. The requirement to file electronically is consistent with FDA 
regulations that also require foreign producers to register 
electronically under the Food Safety Modernization Act, see FDA, 
``Amendments to Registration of Food Facilities; Final Rule,'' 
published in the Federal Register at 81 FR 45911, 51913 (2016). To 
address rare situations where foreign producers have obtained an 
electronic filing waiver from FDA under 21 CFR 1.245 and are also 
unable to interact with TTB electronically, TTB is amending its 
regulations at 27 CFR 27.221 to allow foreign producers to request an 
alternate method from TTB regulations.

B. Foreign Producer Assignment of CBMA Tax Benefits

    Once a foreign producer has registered with TTB and received its 
TTB Foreign Producer ID, the foreign producer may begin assigning CBMA 
tax benefits to importers. These CBMA tax benefits are described in 
further detail below. TTB's temporary regulations set forth the 
information that a foreign producer must provide to TTB to assign these 
CBMA tax benefits. As previously noted, this assignment information 
will be collected electronically through an online interface for 
foreign producers within myTTB. The electronic submission of assignment 
information, in the prescribed format, will facilitate the streamlined 
processing of importer refund claims by allowing foreign producers to 
directly create a record of the assignment in TTB's systems.
    To make an assignment, TTB's temporary regulations at 27 CFR 27.262 
require a foreign producer to submit the following information for each 
assignment: (1) The calendar year for which the CBMA tax benefits are 
being assigned; (2) the importer to whom the assignment is made, 
identified by TTB permit number (or TTB-assigned reference number in 
cases in which an importer is not required to have a permit number); 
(3) the commodity for which the assignment is made (either distilled 
spirits, wine, or beer); (4) the category of reduced rate or credit 
being assigned; (5) the quantity of proof gallons, wine gallons, or 
beer barrels being assigned; and (6) certain certifications and 
acknowledgements that the assignment is in compliance with law and 
regulation. These requirements are generally consistent with those 
currently administered by CBP. See, e.g., Craft Beverage Modernization 
Act (CBMA)--2022 Procedures and Requirements, CSMS #50484790 (Dec. 23, 
2021); CBMA Assignment Certification, https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017/certification (accessed June 22, 2022).
    As described in section I(A) above, the law provides that a foreign 
producer may assign reduced tax rates or tax credits only on a limited 
quantity of imported alcohol during a calendar year. That is, each 
calendar year, there is a limited quantity that a foreign producer may 
assign to one or more importers. Under the temporary regulations set 
forth here, foreign producers may assign tax benefits for a calendar 
year starting no earlier than October 1 of the year prior, but must 
assign the benefits no later than December 31 of the calendar year for 
which the benefits would apply. For example, a foreign producer could 
make assignments of tax benefits for importations in 2024 starting 
October 1, 2023, but no later than December 31, 2024. After December 
31, 2024, a foreign producer will not be allowed to assign, by any 
method, tax benefits for imports in 2024. TTB believes specifying this 
length of time for making assignments, that is, requiring that 
assignments be made during the calendar year in which they would apply 
to the import, is necessary to effectively administer these provisions. 
For example, it may be impossible to adequately determine or verify a 
foreign producer's controlled group status in prior years, and any 
assignments within a controlled group could affect other assignments 
among members of the controlled group. As a result, ensuring the 
assignment is made in the timeframes provided, and no later than the 
year during which the products are imported into the United States, 
minimizes the potential impact on affected entities and risk to the 
revenue.
    It is important to note that the assignment of CBMA tax benefits 
applies to the calendar year of importation, not the calendar year of 
entry for consumption. That is, if in December 2023, alcohol products 
arrive within the Customs territory of the United States or, in the 
case of merchandise imported by vessel, within the limits of a port in 
the United States

[[Page 58027]]

with intent then and there to unlade such merchandise, this is an 
``importation'' under the provisions of the CBMA, and in order to 
receive the CBMA tax benefits, the importer must have an assignment 
from the foreign producer for those products for the year 2023.\19\ 
This is true even if the consumption entry for the products imported in 
December 2023 is not filed until January 2024; the importer must still 
have an assignment of CBMA tax benefits from the foreign producer for 
the year 2023 (and the foreign producer must have assigned those 
benefits no earlier than October 1, 2022, and no later than December 
31, 2023). This is particularly important to note given that the 
administration of the CBMA provisions transfers from CBP to TTB 
beginning January 1, 2023. As explained above in section I(A) of this 
document, TTB will be responsible for processing and issuing refunds on 
foreign distilled spirits, wine, and beer entered for consumption on or 
after January 1, 2023.
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    \19\ TTB interprets its statutory mandate to ensure that the 
quantity of tax benefits assigned ``to any importer does not exceed 
[the quantity] produced by such foreign producer during the calendar 
year which were imported into the United States by such importer,'' 
see, e.g., 26 U.S.C. 5041(a)(6)(b)(i)(I), as reiterating the 
requirement that the assignment year correspond to the calendar year 
of importation. New 27 CFR 27.262(c)(1) addresses general quantity 
limitations on foreign producer assignments.
---------------------------------------------------------------------------

    In making an assignment, TTB's temporary regulations at new 27 CFR 
27.262(b)(2) require the foreign producer to provide the importer's TTB 
permit number (or TTB-assigned reference number) rather than identify 
the importer to whom an assignment is made by name. As explained later 
in this document, importers must file claims with TTB based on their 
TTB permit number, except under limited circumstances in which the 
importer is not required to have a TTB permit number (that is, when the 
importer who imports alcohol does not have an FAA Act basic permit 
because it does not import alcohol products that are regulated by the 
FAA Act).\20\ In those rare cases, to facilitate the claim process for 
CBMA tax benefits, the importer must request a TTB reference number for 
such purposes under the provisions set forth at 27 CFR 27.266 and must 
file the number in ACE as required by 27 CFR 27.264(c).
---------------------------------------------------------------------------

    \20\ See footnote 11.
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    The foreign producer must make assignments of CBMA tax benefits 
based on the TTB permit number or TTB reference number. Otherwise, the 
assignment will not be valid. The foreign producer interface in myTTB 
is designed to provide the importer name associated with a TTB permit 
number for purposes of verifying that it is the permit of the intended 
recipient of the assignment. This process should greatly minimize the 
potential for spelling and other errors that arise with using names as 
identifiers. In the case of assignments based on a TTB-reference 
number, the foreign producer must obtain this number directly from the 
importer.\21\
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    \21\ TTB importer basic permit numbers are publicly available on 
the TTB website as they are issued under the FAA Act; any reference 
numbers issued by TTB for CBMA purposes are protected from 
disclosure by IRC section 6103.
---------------------------------------------------------------------------

    As noted above, in addition to identifying the importer, the 
foreign producer must identify the commodity, the rate, and the tax 
benefit quantities assigned. The foreign producer must identify the 
alcohol commodity for the assignment, either distilled spirits, wine 
(including hard cider), or beer,\22\ and the particular reduced rate or 
credit to be assigned. The reduced rates and credits available to be 
assigned are as follows:
---------------------------------------------------------------------------

    \22\ Importers are responsible for accurately classifying their 
products to CBP for tax purposes; foreign producers should confirm 
with importers that CBMA tax benefits are assigned correctly. For 
example, sak[eacute] is usually classified as beer under the 
Internal Revenue Code, although it is subject to wine labeling 
requirements under the FAA Act. Sak[eacute] importers will not be 
able to claim a refund of taxes paid to CBP at $18 a barrel if the 
foreign producer incorrectly assigns CBMA wine tax credits to the 
importer. Note that sak[eacute] fortified with distilled spirits is 
taxed as a distilled spirits product under the IRC at the rate of 
$13.50 a proof gallon, see CBP Ruling NY A83563 (1996).
---------------------------------------------------------------------------

     Each foreign distilled spirits operation may assign 
reduced tax rates of $2.70 per proof gallon on the first 100,000 proof 
gallons imported, and $13.34 per proof gallon on the next 22.13 million 
proof gallons imported into the United States.
     Each foreign wine producer may assign tax credits of $1 
per wine gallon on the first 30,000 wine gallons of wine imported, 90 
cents on the next 100,000 wine gallons imported, and 53.5 cents on the 
next 620,000 wine gallons imported. The tax credits apply to all wine 
tax rates,\23\ except that CBMA provides for adjusted credits for 
imported wine eligible for the hard cider tax rate (6.2 cents, 5.6 
cents, and 3.3 cents, respectively).
---------------------------------------------------------------------------

    \23\ Wine tax rates vary based on a number of factors such as 
alcohol and carbonation content. See 26 U.S.C. 5041.
---------------------------------------------------------------------------

     Each foreign brewer may assign a reduced tax rate of $16 
per barrel on the first 6,000,000 barrels imported into the United 
States.
    A foreign producer must also specify the quantity of proof gallons, 
wine gallons, or beer barrels being assigned. Foreign producers may 
assign the CBMA tax benefits to multiple importers so long as a foreign 
producer's total assignments do not exceed the total quantities allowed 
by law, including taking into account controlled group limitations.\24\ 
Finally, the foreign producer making an assignment must provide certain 
certifications attesting to the submitter's authority and the 
submitter's acknowledgement of statutory limitations on the quantities 
of assignments that may be made. The foreign producer must also 
acknowledge that providing erroneous or fraudulent information may 
cause TTB to revoke the foreign producer's eligibility to assign CBMA 
tax benefits. See section II(D) of this document, infra.
---------------------------------------------------------------------------

    \24\ As explained in further detail in section II(A)(ii), the 
IRC provides that the quantity limitations on the reduced rates are 
applied to the entire controlled group.
---------------------------------------------------------------------------

    Under the temporary regulations, once a foreign producer assigns 
CBMA tax benefits to an importer, the foreign producer may not revoke 
or reduce the assigned benefits unless the importer elects not to take 
the assignment. This is consistent with the current administration of 
these benefits under CBP's responsibility; that is, under current CBP 
procedures, the foreign producer must make an Assignment Certification 
on company letterhead, signed by a duly authorized officer or employee 
of the foreign producer,\25\ and once the importer is in possession of 
that assignment, there was not a mechanism by which the assignment 
could then be changed unilaterally by the foreign producer.
---------------------------------------------------------------------------

    \25\ See https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017/certification?language_content_entity=en, accessed June 14, 2022.
---------------------------------------------------------------------------

    Information submitted to TTB by or on behalf of a foreign producer, 
including the assignment of tax benefits to an importer, is the return 
information of that foreign producer and TTB will not disclose such 
information except as authorized by law. Because users of the foreign 
producer interface must each be granted authority by the foreign 
producer to act on its behalf, TTB is authorized under 26 U.S.C. 6103 
to disclose the foreign producer's return information to users in the 
online interface. Because assignments that a foreign producer makes to 
an importer are also the importer's return information, TTB may 
disclose information about the assignment to that importer under 26 
U.S.C. 6103(e)(1) and (e)(7).

C. Importer Product Entry and Refund Claims Procedures

    As stated above, beginning January 1, 2023, importers will no 
longer be eligible to apply the CBMA tax benefits

[[Page 58028]]

when paying tax to CBP. Instead, importers must pay the full tax rate 
initially to CBP and subsequently submit refund claims to TTB. The 
temporary regulations set forth the procedures under which importers 
will submit such claims. Importers are required to submit refund claims 
electronically through an importer claims interface that will be part 
of myTTB. TTB is providing the new electronic system, dedicated to the 
processing of CBMA importer claims, and requiring its use to support 
timely, effective, and accurate claims processing. TTB will separately 
publish alternate procedures for submitting claims and supporting 
documentation in the potentially rare cases where an importer is unable 
to file entry or entry summary data electronically in ACE and/or 
perfect a claim through the procedure established in the temporary 
regulations.
    Prior to submitting a claim, the temporary regulations require 
importers to have filed the applicable entry summary information with 
CBP electronically through ACE. TTB has attempted to streamline the 
claims process by relying upon information the importer would have 
already filed with CBP about the applicable entries through ACE, as 
well as information about the foreign producer's assignment of benefits 
to that importer through TTB's electronic system.
    The procedures under which foreign producers will assign CBMA tax 
benefits to importers are discussed in sections II(A) and (B) of this 
document. The procedures for importers to provide through ACE the data 
underlying a claim, as well as the procedures for filing a refund claim 
with TTB, are explained below.
i. Electronic Filing and Information Required on Product Entry Summary
    Prior TTB regulations did not require electronic filing of import 
data, but set forth the information that an importer must file with CBP 
on the entry or entry summary if filing TTB data electronically in 
connection with distilled spirits, wines, and beer imported subject to 
tax. See 27 CFR 27.48. Among the information required from electronic 
filers is the importer's FAA Act basic permit number and certain 
information necessary to determine the amount of tax due on the 
imported product, such as the quantity and tax classification. See 27 
CFR 27.48(a). In addition, under CBP's current rules for administering 
the CBMA reduced tax rates and credits, importers must submit certain 
information substantiating their eligibility for such reduced rates and 
credits. See CSMS #50484790 (Dec. 23, 2021), available at https://content.govdelivery.com/bulletins/gd/USDHSCBP-3025636. To facilitate 
TTB's electronic processing of CBMA importer claims in 2023 and onward, 
these temporary regulations at 27 CFR 27.264(c) require importers 
intending to file CBMA importer refund claims to file electronically 
their CBP entries and/or entry summaries along with TTB data required 
at 27 CFR 27.48(a)(2). The electronic filing must also include 
information consistent with that currently required by CBP. Existing 
ACE programming is expected to continue to collect this information, 
with certain definitional updates described further below.
    To claim an assigned CBMA tax benefit on imported alcohol, CBP 
currently requires the importer to designate the entry summary with the 
claim indicator ``C'' at the time of entry summary or when submitting a 
post-summary correction (PSC). CBP further requires entry summaries 
marked with the ``C'' indicator to include seven data elements 
pertaining to qualification for the reduced rate or credit claimed. The 
seven data elements are:
    (1) Controlled Group Name,
    (2) Foreign Producer Identifier,
    (3) Foreign Producer Name,
    (4) Allocation Quantity,
    (5) Flavor Content Credit Indicator,
    (6) CBMA Rate Designation Code, and
    (7) TTB Tax Rate.
    These data elements are defined in the ``CBP and Trade Automated 
Interface Requirements--Entry Summary Create/Update'' (CATAIR) 
available at https://www.cbp.gov/document/guidance/ace-abi-catair-entry-summary-createupdate. See also ``ACE CBMA Tax Rates Table,'' 
https://www.cbp.gov/trade/program-administration/entry-summary/cbma-2017/ace-cbma-tax-rates-table (last modified February 16, 2021).
    For shipments entered on or after January 1, 2023, the ACE CBMA 
claim indicator and associated data elements will continue to be 
required by TTB, as reflected in these temporary regulations and in the 
CATAIR, which will be updated. Importers may view the definitional 
updates that will be effective in 2023 in future CBP revisions to the 
CATAIR, available at https://www.CBP.gov. The updated requirements are 
integral to TTB's plans for electronic processing of CBMA import refund 
claims, as this information will allow TTB to associate a foreign 
producer's assignment of CBMA rates with an importer's entry of 
products subject to that assignment. This approach is also intended to 
be least disruptive to importers, providing a bridge between the CBMA 
requirements prior to 2023 and those applicable starting on January 1, 
2023. TTB will consider the utility of the data elements as it begins 
administering the amended CBMA provisions, to determine whether changes 
are needed.
    Importers intending to file a CBMA refund claim on alcohol products 
entered for consumption on or after January 1, 2023, will be required 
to include the claim indicator code ``C'' at the time of entry summary 
or PSC. This ``C'' indicator will signify that the importer has or 
reasonably expects to have a CBMA tax benefit assignment from the 
foreign producer and expects to file a refund claim with TTB based on 
the assigned reduced rate or credit. When designating an entry summary 
with the ``C'' indicator, importers will also be required to provide 
the following information for each line item on which they intend to 
claim a CBMA refund:
    (1) Controlled Group Name. This is the name, for purposes of CBMA, 
that identifies the Controlled Group (e.g., parent company name) and 
was previously collected by CBP through the CBMA Spreadsheet, 
Controlled Group Spreadsheet, and the CBP ACE data elements.\26\ 
Importers that have received assignments from the same controlled group 
in calendar years prior to 2023 should continue to report the same 
controlled group name to TTB in 2023.
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    \26\ TTB understands that, when a foreign producer is not under 
common ownership with other alcohol producers, importers currently 
report to CBP the foreign producer's name in this field, consistent 
with the statutory provisions at 26 U.S.C. 5001(c)(3)(C), 
5041(c)(6)(C), and 5051(a)(4)(C) stating that any importer electing 
to receive assigned tax benefits is ``deemed to be a member of the 
controlled group'' of the foreign producer. TTB does not interpret 
these provisions as imposing any overall limitation on the quantity 
of tax benefits that may be assigned to an importer by multiple 
unrelated foreign producers. As set forth in these regulations, 
controlled group limitations apply only to foreign and/or domestic 
producers under common ownership.
---------------------------------------------------------------------------

    (2) Foreign Producer Identifier. This is the identifying code 
provided to the foreign producer by TTB when the foreign producer 
registers with TTB. The Foreign Producer Identifier identifies the 
foreign producer who made or is reasonably expected to make the CBMA 
tax benefit assignment applicable to the line item. This will differ 
from the identifier reported to CBP in prior years.
    (3) Foreign Producer Name. This is the name of the foreign 
producer, registered with TTB, who made or is reasonably expected to 
make the CBMA tax benefit assignment.

[[Page 58029]]

    (4) Flavor Content Credit Indicator (for certain distilled spirits 
only). This is an indicator that the importer is using an eligible 
flavor content ``credit.'' This is used when depositing tax on imported 
distilled spirits at an effective tax rate based on eligible wine and/
or flavor content, pursuant to 27 CFR 27.76 and 27.77.\27\
---------------------------------------------------------------------------

    \27\ If an importer uses an eligible wine and/or flavor content 
credit, the allowable refund will not exceed the tax paid.
---------------------------------------------------------------------------

    (5) CBMA Rate Designation Code. This is an ACE code that specifies 
the CBMA rate for purposes of the TTB refund claim. The CBMA Rate 
Designation Codes are provided in the `CBMA Rate Designation Code' 
column on the `ACE CBMA Rate Table' spreadsheet publicly available at 
TTB.gov.
    (6) TTB Tax Rate (Confirmation). This is an ACE code that serves as 
a validation of the CBMA Rate Designation Code to ensure that the CBMA 
refund claim is based on the appropriate reduced tax rate or tax credit 
category. The TTB Tax Rate codes are provided in the ``TTB Tax Rate 
(Confirmation)'' column on the ``ACE CBMA Rate Table'' spreadsheet 
publicly available at TTB.gov.
    TTB recognizes that, in order to provide this information 
accurately for the specific quantities of imported alcohol that will be 
subject to refund claims based on foreign producer assignments, the 
importer may need to report a shipment of a single product as multiple 
line items on the entry summary. For example, assume that a foreign 
winery assigns to an importer the entire 30,000 wine gallon allotment 
of the $1.00 credit and the entire 100,000 wine gallon allotment of the 
$0.90 credit. If the importer's first shipment from that foreign 
producer consists of 40,000 wine gallons of a single wine product, its 
entry summary will need two separate line items to account for the two 
different CBMA tax credits assigned to it--one line item for 30,000 
wine gallons with the $1.00 credit and one line item for the remaining 
10,000 gallons with the $0.90 credit.
ii. Quarterly Submission of CBMA Import Refund Claims
    After a foreign producer has made an assignment of CBMA tax 
benefits to an importer, the importer has imported and entered for 
consumption the products subject to the assignment, and the importer 
has paid to CBP the tax due on those products, the importer is 
generally entitled to seek a refund from TTB based on the assigned CBMA 
tax benefits. The CBMA import refund claim provisions of the IRC 
provide that amounts allowed as a refund may be determined no less 
frequently than quarterly. See 26 U.S.C. 5001(c)(4)(A)(ii), 
5041(c)(7)(A)(ii), and 5051(a)(6)(A)(ii). TTB's temporary regulations 
establish a quarterly refund determination period, as TTB believes that 
setting this refund period is necessary to provide TTB an opportunity 
to analyze entry data for potential over-assignment of CBMA tax 
benefits based on noncompliance with controlled group limitations. 
Consistent with this quarterly refund period, the temporary regulations 
provide that the calendar quarter must end before CBMA import refund 
claims may be filed for any consumption entries made during that 
quarter.
    To minimize delay in issuing refunds on valid claims, TTB's 
temporary regulations and electronic filing systems are intended to 
facilitate electronic processing of CBMA import refund claims. By the 
end of each calendar quarter, or shortly thereafter, the foreign 
producer will have had the opportunity to submit its assignment to the 
importer and the importer will have filed its entry summary and paid 
the tax--the vast majority of the information required to substantiate 
the importer's CBMA import refund claim. That is, two key elements of a 
prospective CBMA import refund claim are (1) the foreign producer's 
assignment of the CBMA tax benefit and (2) the importer's entry data 
for the products subject to the foreign producer's assignment 
(including payment of tax to CBP). As a result, the process for an 
importer to submit a claim will primarily consist of electing to 
receive tax benefit assignments by logging in to the myTTB system for 
submitting CBMA importer refund claims, identifying the applicable 
claim period and the lines on the customs entry summary for which a 
claim will be filed, and otherwise verifying information the importer 
already submitted through ACE for the consumption entry. Importers are 
responsible for ensuring that the data that they have filed in ACE is 
accurate before submitting their claims through myTTB.
    Importers may begin filing claims for each calendar quarter after 
that calendar quarter comes to an end. For example, claims for the 
first calendar quarter ending March 31 may be filed beginning on April 
1. There are, however, factors that could delay an importer's ability 
to file a claim. First, the importer must have actually paid the tax 
due on the imported alcohol before filing a claim for the refund of the 
tax. Second, for purposes of processing the claim, particularly for 
automation of such processing, TTB intends to use ACE data. The data 
transfer from ACE to TTB's CBMA importer refund claims system is not 
instantaneous, and entry data may even take several days to become 
available.
    CBMA importer refund claims will be treated in the same manner as 
an overpayment of tax. See 26 U.S.C. 5001(c)(4)(A)(ii), 
5041(c)(7)(A)(ii), and 5051(a)(6)(A)(ii). Under the electronic 
submission process described above, TTB envisions that most valid 
claims will be paid shortly after they are filed. As with any claim 
related to an overpayment, if TTB determines that the importer is 
entitled to the amount claimed, TTB will pay the claim along with any 
required interest.\28\ Because these claims are treated in the same 
manner as an overpayment of tax, the temporary regulations provide that 
the limitations periods set forth in 26 U.S.C. 6511 apply to CBMA 
importer refund claims.\29\ The general rule in section 6511(a) 
requires a claim for refund of an overpayment to be filed by the 
taxpayer within three years from the time the return was filed or two 
years from the time the tax was paid, whichever period expires later.
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    \28\ Interest is allowed at an established overpayment rate, 
which is applied to the excess tax amount determined under statute 
``for the number of days in the filing period for which the refund . 
. . is being determined.'' See 26 U.S.C. 5001(c)(4)(B)(ii); 
5041(c)(7)(B)(ii); and 5051(a)(6)(B)(ii) (effective January 1, 
2023). Interest is disallowed in the case of refunds made within 90 
days. See 26 U.S.C. 5001(c)(4)(D); 5041(c)(7)(D); and 5051(a)(6)(D) 
(``Rules For Refunds Within 90 Days'') (effective January 1, 2023). 
Thus, TTB will not pay interest if a refund is issued within 90 days 
after a claim is filed.
    TTB will calculate the 90-day period and allowable interest 
starting with the date a complete and valid claim for refund is 
filed with TTB rather than the date of tax payment to CBP because no 
overpayment exists at entry as importers are not eligible for the 
tax benefits at the time of entry. In addition, until the importer 
submits a claim, no ``amount determined'' exists to be treated as an 
overpayment. Absent an importer's claim, TTB would not know how much 
tax would have been imposed at entry if the importer had been 
eligible for the tax benefits at the time of entry. As a result, 
interest will be applied to the lump-sum amount determined for each 
filing period rather than to varying amounts paid with individual 
entries.
    \29\ While in its June 2021 Report to Congress on Administration 
of Craft Beverage Modernization Act Refund Claims for Imported 
Alcohol, Treasury noted the potential for ambiguity with respect to 
the intersection between the Internal Revenue Code (IRC) and the 
Tariff Act, TTB interprets the statutory language to require the 
application of IRC statutes of limitations. This is also consistent 
with TTB's current practice of applying IRC statutes of limitations 
to importer claims that fall within TTB's delegated authority.
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iii. Electronic Submission of Claims
    The temporary regulations require CBMA import refund claims to be 
filed

[[Page 58030]]

electronically through myTTB. We understand that this is consistent 
with CBP's implementation of the National Customs Automation Program, 
through which almost all imported alcohol entry and entry summary 
documentation is now filed electronically, in that case, in ACE. TTB 
recognizes that there may be times when unforeseen circumstances 
prevent an importer from filing entry or entry summary data 
electronically in ACE and/or perfecting a claim through the procedure 
established in the temporary regulations. TTB will publish alternate 
procedures governing electronic uploads of claims and supporting 
documentation for manual review to address these circumstances.

D. Procedures for Revocation of Eligibility

    The statute requires the establishment of procedures for revoking 
the eligibility of a foreign producer to assign, and an importer to 
receive, CBMA tax benefits in cases where the foreign producer provides 
any erroneous or fraudulent information that TTB deems to be material 
to the foreign producer's qualification for such rates and credits. See 
26 U.S.C. 5051(a)(4)(B)(iv) (beer); 5041(c)(6)(B)(iv) (wine); and 
5001(c)(3)(B)(iv) (distilled spirits). Consistent with procedural due 
process principles, the temporary regulations set forth the procedures 
by which foreign producers will be notified of a contemplated 
revocation and by which such entities will be given an opportunity to 
be heard.
    The temporary regulations provide that TTB may revoke a foreign 
producer's eligibility for CBMA tax benefits if the foreign producer--
including anyone acting on its behalf--provides erroneous or fraudulent 
information in a foreign producer registration or in an assignment of 
CBMA tax benefits, and such erroneous or fraudulent information is 
determined by TTB to be material to qualification for CBMA tax 
benefits. Where TTB has reason to believe that the foreign producer has 
provided material erroneous or fraudulent information, TTB will provide 
written notice to the affected foreign producer of TTB's intent to 
revoke their eligibility for CBMA tax benefits. This notice will set 
forth the facts supporting TTB's contemplated revocation, specifically 
the information TTB believes to be erroneous or fraudulent and an 
explanation of its materiality to qualifying for CBMA tax benefits. 
This notice will be provided to the foreign producer's representatives 
registered with TTB.
    Once a notice of contemplated revocation has been issued to a 
foreign producer the temporary regulations require the foreign producer 
to provide their written response within 45 days. This response should 
explain why the foreign producer believes the information at issue was 
not erroneous or fraudulent, or why such information is not material to 
the foreign producer's eligibility for CBMA tax benefits. The temporary 
regulations require this response to be submitted electronically 
through means prescribed by the appropriate TTB officer.
    TTB will review the foreign producer response to the notice of 
contemplated revocation and come to an initial revocation 
determination. The contemplated revocation action will either be 
dismissed, or TTB will issue an order of revocation setting forth the 
facts and analysis supporting revocation. This revocation of 
eligibility is not to exceed three years, except where the foreign 
producer has previously had their eligibility revoked (in which case 
any subsequent revocation may be permanent). Further, in any case where 
a criminal conviction results from the provision of erroneous or 
fraudulent information, eligibility will be permanently revoked.
    A foreign producer may appeal an order of revocation by submitting 
a written appeal to the appropriate TTB officer within 45 days of 
receipt of the order of revocation. The written appeal should explain 
why the foreign producer believes its revocation of eligibility is in 
error, supported by facts and analysis. The foreign producer must 
submit the appeal electronically through means prescribed by the 
appropriate TTB officer. TTB will review the appeal and, within 90 days 
of receipt, notify the requestor whether the appeal has been granted or 
denied. Consistent with the Administrative Procedure Act, the temporary 
regulations require a foreign producer to first exhaust its 
administrative appeals provided by regulation before seeking judicial 
review of a revocation. See 5 U.S.C. 704.

III. Public Participation

    For submitting comments, please refer to the notice of proposed 
rulemaking on this subject published in the ``Proposed Rules'' section 
of this issue of the Federal Register.

IV. Regulatory Analysis and Notices

A. Executive Order 12866

    It has been determined that this rule is not a significant 
regulatory action as defined by Executive Order 12866. Therefore, a 
regulatory impact assessment is not required.

B. Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), TTB has analyzed the potential economic effects of this action 
on small entities. In lieu of the initial regulatory flexibility 
analysis required to accompany proposed rules under 5 U.S.C. 603, 
section 605 allows the head of an agency to certify that a rule will 
not, if promulgated, have a significant economic impact on a 
substantial number of small entities. The following analysis provides 
the factual basis for TTB's certification under section 605.
i. Impact on Small Entities
    While TTB believes the majority of businesses subject to the 
regulations are small businesses, the regulations in this document will 
not have a significant impact on those small entities. TTB is requiring 
the minimum information necessary to administer the statutory 
requirements of The Tax Relief Act concerning the CBMA tax benefits for 
imported alcohol. To the extent that any burden exists, such burden 
flows from the statute itself and the shift to the refund method of 
obtaining CBMA tax benefits. The electronic systems established by TTB 
will not pose a significant burden because the majority of the foreign 
producers and importers already file electronically with FDA and CBP 
respectively.
    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), TTB certifies that the regulations will not have a significant 
economic impact on a substantial number of small entities. The rule 
will not impose, or otherwise cause, a significant increase in 
reporting, recordkeeping, or other compliance burdens on a substantial 
number of small entities. TTB expects that the regulations will not 
have significant secondary or incidental effects on a substantial 
number of small entities. Accordingly, a regulatory flexibility 
analysis is not required. Pursuant to 26 U.S.C. 7805(f), TTB will 
submit the regulations to the Chief Counsel for Advocacy of the Small 
Business Administration for comment on the impact of the regulations on 
small businesses.

C. Paperwork Reduction Act

    As noted previously in this document, TTB will administer the CBMA 
import refund program through two information collection components in 
its online filing system, ``myTTB.'' As described in new 27 CFR part 
27, subpart P, Craft Beverage Modernization

[[Page 58031]]

Act Import Refund Claims, foreign producers will use the foreign 
producer interface to register with TTB, receive a TTB-issued Foreign 
Producer ID, and make assignments of CBMA tax benefits to importers. 
The information collection requirements relevant to foreign producer 
registration and assignments of CBMA benefits are described in new 
sections 27 CFR 27.254 through 27.264. Importers will use the CBMA 
importer claims interface to review and receive CBMA tax benefits 
assigned to them by foreign producers, review and select the ACE 
entries they identified as intended to be subject to a CBMA import 
refund claim, and submit refund claims pertaining to those assignments 
and entries. The information collection requirements relevant to CBMA 
importer claims are described in new sections 27 CFR 27.264 and 27.266.
    For the foreign producer interface, TTB estimates that 19,000 
respondents will respond an average of once per year to that 
information collection, resulting in 19,000 total annual responses, 
with each response taking an estimated 0.75 hours to 2 hours to 
complete, for a total estimated annual burden of 14,250 to 38,000 
hours. This includes the time for reviewing instructions, searching 
existing information sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information.
    For CBMA importer claims interface, TTB estimates that 7,000 
respondents will respond 4 times per year, resulting in 28,000 total 
annual responses. TTB further estimates that each response will require 
0.5 to 2 hours to complete, resulting in an estimated total of 14,000 
to 56,000 annual burden hours. This includes the time for reviewing 
instructions, searching existing information sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    As noted above, TTB has submitted the new information collection 
requirements to the Office of Management and Budget (OMB) for review 
and approval under one OMB control number, titled ``Information Related 
to Imported Alcohol Tax Refund Claims.'' The total annual burden for 
this new information collection request, which will contain the two 
components--for foreign producer registration and assignment and for 
importer claims--noted above, is estimated as follows:
     Number of Respondents: 26,000.
     Number of Responses: 47,000.
     Total Burden Hours: 28,250 to 94,000 hours.
    Comments on these new recordkeeping and reporting requirements 
should be sent to OMB at Office of Management and Budget, Attention: 
Desk Officer for the Department of the Treasury, Office of Information 
and Regulatory Affairs, Washington, DC 20503 or by email to 
[email protected]. A copy should also be sent to TTB by any 
of the methods previously described. Comments on the information 
collections should be submitted no later than November 22, 2022. 
Comments are specifically requested concerning:
     Whether the collections of information submitted to OMB 
are necessary for the proper performance of the functions of the 
Alcohol and Tobacco Tax and Trade Bureau, including whether the 
information will have practical utility;
     The accuracy of the estimated burdens associated with the 
collections of information submitted to OMB;
     How to enhance the quality, utility, and clarity of the 
information to be collected;
     How to minimize the burden of complying with the proposed 
collections of information, including the application of automated 
collection techniques or other forms of information technology; and
     Estimates of capital or start-up costs and costs of 
operation, maintenance, and purchase of services to provide 
information.

D. Inapplicability of Prior Notice

    TTB is issuing this temporary rule without notice and prior 
opportunity for public comment because it is a rule of agency procedure 
exempt from notice and comment under section 4(a) of the Administrative 
Procedure Act (APA) (5 U.S.C. 553(b)(A)). This temporary rule sets 
forth the procedures governing TTB's processing and administration of 
claims for CBMA tax benefits, including through establishing electronic 
systems designed to authenticate foreign producers, applying statutory 
limitations on the tax benefits that may be assigned, accelerating the 
approval and payment of valid refund claims, and mitigating revenue 
risks associated with the processing of claims. The rule prescribes the 
procedures for importers to receive CBMA tax benefits from TTB based on 
an assignment by foreign producers, as well as the procedures through 
which TTB may revoke foreign producers' eligibility to make assignments 
when erroneous or fraudulent information is submitted. The rule does 
not address the substance of the reduced tax rates or tax credits 
available under the CBMA.
    In accordance with 26 U.S.C. 7805(e), TTB is soliciting public 
comment on the regulatory provisions contained in this temporary rule 
in a concurrently issued notice of proposed rulemaking.

List of Subjects

27 CFR Part 26

    Alcohol and alcoholic beverages, Beer, Excise taxes, Imports, 
Liquors, Notice requirements, Reporting and recordkeeping requirements, 
Wine.

27 CFR Part 27

    Alcohol and alcoholic beverages, Beer, Excise taxes, Imports, 
Liquors, Notice requirements, Reporting and recordkeeping requirements, 
Wine.

Amendments to the Regulations

    For the reasons discussed above in the preamble, TTB amends 27 CFR 
parts 26 and 27 as follows:

PART 26--LIQUORS AND ARTICLES FROM PUERTO RICO AND THE VIRGIN 
ISLANDS

0
1. The authority citation for part 26 is revised to read as follows:

    Authority: 19 U.S.C. 81c; 26 U.S.C. 5001, 5007, 5008, 5010, 
5041, 5051, 5061, 5111-5114, 5121, 5122-5124, 5131-5132, 5207, 5232, 
5271, 5275, 5301, 5314, 5555, 6001, 6038E, 6065, 6109, 6301, 6302, 
6804, 7101, 7102, 7651, 7652, 7805; 27 U.S.C. 203, 205; 31 U.S.C. 
9301, 9303, 9304, 9306.


0
2. Add Sec.  26.208 to read as follows:


Sec.  26.208  Craft Beverage Modernization Act Tax benefits.

    The procedures set forth in 27 CFR part 27, subpart P, apply to the 
application of Craft Beverage Modernization Act tax benefits for 
products produced in and imported from the Virgin Islands and entered 
for consumption subject to tax, except as subpart P would be manifestly 
incompatible with the intent of the other regulations in this part.

PART 27--IMPORTATION OF DISTILLED SPIRITS, WINES, AND BEER

0
3. The authority citation for part 27 is revised to read as follows:

    Authority: 5 U.S.C. 552(a), 19 U.S.C. 81c, 1202; 26 U.S.C. 5001, 
5007, 5008, 5010, 5041, 5051, 5054, 5061, 5121, 5122-5124, 5201, 
5205, 5207, 5232, 5273, 5301, 5313, 5382, 5555, 6038E, 6065, 6109, 
6302, 7805.


Sec.  27.221  [Amended]

0
4. Section 27.221 is amended by:
0
a. Adding the phrase ``or foreign producer'' after the word 
``importer'' in paragraph (a) introductory text; and

[[Page 58032]]

0
b. Adding the phrase ``or Foreign Producer ID of the foreign producer'' 
after the word ``importer'' in paragraph (a)(1).


Sec. Sec.  27.223 through 27.249   [Reserved]

0
5. Add reserved Sec. Sec.  27.223 through 27.249.

0
6. Add subpart P, consisting of Sec. Sec.  27.250 through 27.268, to 
read as follows:

Subpart P--Craft Beverage Modernization Act Import Refund Claims

Sec.
27.250 Scope.
27.252 Meaning of terms.
27.254 Registration of foreign producer.
27.256 Foreign producer ownership information.
27.258 Changes to foreign producer registration.
27.260 Persons authorized to act on behalf of foreign producer.
27.262 Foreign producer's assignment of CBMA tax benefits.
27.264 CBMA import refund claim submission.
27.266 Importer reference number.
27.268 Revocation of eligibility for CBMA tax benefits.


Sec.  27.250  Scope.

    This subpart contains procedural requirements relative to the 
refunds of internal revenue tax for imported alcohol made available 
under the Craft Beverage Modernization Act provisions of the Internal 
Revenue Code of 1986 at 26 U.S.C. 5001(c)(4), 5041(c)(7), and 
5051(a)(6). The refunds available under this subpart apply only to 
imported products entered for consumption on or after January 1, 2023.


Sec.  27.252  Meaning of terms.

    When used in this subpart and in forms prescribed under this 
subpart, where not otherwise distinctly expressed or manifestly 
incompatible with the intent thereof, terms have the meaning ascribed 
in this section. Words in the plural form include the singular, and 
vice versa.
    CBMA. The Craft Beverage Modernization Act provisions (sections 
13801-13808) of the law commonly known as the Tax Cuts and Jobs Act 
(Pub. L. 115-97), as amended.
    CBMA importer refund claims system. The electronic system 
established by TTB for the collection and review of claims for refund 
of internal revenue tax authorized under Sec.  27.264. The CBMA 
importer refund claim system is available at https://www.TTB.gov.
    CBMA tax benefits. The reduced tax rates or tax credits made 
available under CBMA at 26 U.S.C. 5001(c)(1) (distilled spirits), 
5041(c)(1) (wine), and 5051(a)(1) (beer), and made assignable to 
importers by foreign distilled spirits operations, wineries, and 
brewers pursuant to sections 5001(c)(3), 5041(c)(6), and 5051(a)(4), 
respectively.
    Foreign producer. A foreign distilled spirits operation, wine 
producer, or brewer.
    Foreign Producer ID. The identification number issued to a foreign 
producer registered with TTB under Sec.  27.254.
    Foreign producer registration and assignment system. The electronic 
system established by TTB for the collection of information related to 
the registration of a foreign producer under Sec. Sec.  27.254 through 
27.260 and the assignment of CBMA tax benefits by such foreign producer 
under Sec.  27.262. The foreign producer registration and assignment 
system is available at https://www.TTB.gov.


Sec.  27.254  Registration of foreign producer.

    (a) General. A foreign producer electing to assign CBMA tax 
benefits to one or more importers must first register with TTB and 
receive a Foreign Producer ID.
    (b) Information required in registration. A foreign producer must 
provide the following information through the foreign producer 
registration and assignment system to register with TTB and receive a 
Foreign Producer ID:
    (1) The name, country of residence, and principal business address 
of the foreign producer;
    (2) The name, title, country of residence, phone number, and email 
address of an employee or individual owner of the business who has 
authority to act for the business;
    (3) If different than the individual identified in paragraph (b)(2) 
of this section, the name, address, phone number, and email address of 
the individual submitting the registration and authorized to act on the 
foreign producer's behalf;
    (4) The Food Facility Registration number(s) obtained from the U.S. 
Food and Drug Administration (FDA) under 21 CFR 1.225 that may be 
reported to FDA under 21 CFR 1.281(a)(6)(ii) for the purposes of 
importing into the United States the foreign producer's alcohol 
products;
    (5) Identifying information for the individuals and/or entities 
with ownership interests in the foreign producer as required by Sec.  
27.256, or a certification that Sec.  27.256 does not require the 
foreign producer to provide such identifying information;
    (6) Any prescribed certifications attesting to the authority of the 
individual submitting the registration and the truthfulness of the 
information submitted, the acknowledgement by the person submitting the 
registration that providing erroneous or fraudulent information may 
cause TTB to revoke the foreign producer's eligibility to assign CBMA 
tax benefits, and consent to receive electronically any written notice 
of contemplated revocation;
    (7) Any additional information required by the appropriate TTB 
officer (including, through the foreign producer registration and 
assignment system) in order to verify a submitter's identity. Such 
information may include identifying numbers (e.g., Employer 
Identification Number, Social Security Number) as provided in 26 U.S.C. 
6109; and
    (8) Any additional information required by the appropriate TTB 
officer on a case-by-case basis, to administer CBMA.
    (c) Language. All registration information must be submitted in the 
English language except an individual's name, the name of a company, 
and the name of a street may be submitted in a foreign language. All 
information, including these items, must be submitted using the English 
alphabet.
    (d) Electronic registration required. The foreign producer must 
submit the information required by paragraph (b) of this section 
electronically using the format provided by TTB.


Sec.  27.256  Foreign producer ownership information.

    (a) When required. A foreign producer must provide, as part of the 
registration required by Sec.  27.254, the identifying information set 
forth in paragraph (b) of this section only when one or more of the 
individuals or entities holding an ownership interest in the foreign 
producer of 10 percent or more also holds an ownership interest in any 
distilled spirits operation, winery, or brewery in the United States or 
in any other foreign producer that has assigned or will assign CBMA tax 
benefits for any calendar year in which the registering foreign 
producer also assigns such benefits. Otherwise, the foreign producer 
must only certify that this scenario does not apply.
    (b) Identifying information--(1) Individual owner. For each 
individual holding an ownership interest of 10 percent or more in the 
foreign producer, the foreign producer must provide the following 
information when required by paragraph (a) of this section:
    (i) The name, address, and phone number of the individual.

[[Page 58033]]

    (ii) [Reserved]
    (2) Other entity. For each entity (other than an individual) 
holding an ownership interest of 10 percent or more in the foreign 
producer, the foreign producer must provide the following information 
when required by paragraph (a) of this section:
    (i) The name, address, and phone number of the entity;
    (ii) If the entity is a U.S. entity, and if the entity has such a 
number, the entity's Employer Identification Number issued by the U.S. 
Internal Revenue Service; and
    (iii) If the entity is a foreign entity, and if the entity has such 
a number, the Dun & Bradstreet Data Universal Numbering System number 
of the entity.


Sec.  27.258  Changes to foreign producer registration.

    Whenever there is a change to any of the information submitted by 
the foreign producer under Sec.  27.254, the foreign producer must 
update its registration with the new information within 60 days. 
Whenever the appropriate TTB officer determines that a foreign producer 
has failed to update its registration information as required, the 
foreign producer's registration is deemed invalid and the foreign 
producer will be unable to assign CBMA tax benefits until the foreign 
producer updates its registration as required or the appropriate TTB 
officer is satisfied that no such update is required.


Sec.  27.260  Persons authorized to act on behalf of foreign producer.

    (a) General. A foreign producer registered with TTB to assign CBMA 
tax benefits must identify at least one person authorized to act on its 
behalf. The person who initially registers a foreign producer under 
Sec.  27.254 must have authorization from the foreign producer to 
provide the required registration information, edit the foreign 
producer's registration information, designate additional persons who 
are also authorized by the foreign producer to act on the foreign 
producer's behalf or cancel the designations of authorized persons, and 
make assignments of CBMA tax benefits. All authorized representatives 
of the foreign producer must have authority to receive and respond to 
communications from TTB, including notice of contemplated revocation 
under Sec.  27.268(b).
    (b) Authorization of additional persons. (1) A foreign producer may 
authorize more than one person to act on its behalf within the foreign 
producer registration and assignment system. To designate an additional 
person as described above, the foreign producer must provide the 
following information:
    (i) The name and email address of the person; and
    (ii) The appropriate system role for the person, based on the 
functions in paragraph (a) of this section that the person is 
authorized to carry out.
    (2) TTB may collect additional information from the additional 
person, as needed, to verify their identity. Such information may 
include identifying numbers (e.g., Social Security Number) as provided 
in 26 U.S.C. 6109.
    (c) Proof of authority. An individual acting on behalf of the 
foreign producer in the foreign producer registration and assignment 
system must maintain documentation establishing the individual's 
authority to act for the foreign producer and provide this 
documentation to TTB upon request. Any representative must be 
authorized by the foreign producer pursuant to a duly executed power of 
attorney or other document deemed acceptable to the appropriate TTB 
officer.


Sec.  27.262  Foreign producer's assignment of CBMA tax benefits.

    (a) General. A foreign producer who has registered with TTB under 
Sec.  27.254 and received a Foreign Producer ID may assign its CBMA tax 
benefits to importers, subject to the quantity limitations established 
by law.
    (b) Information required in assignment. A foreign producer must 
provide the following information through the foreign producer 
registration and assignment system to make an assignment of CBMA tax 
benefits to an importer:
    (1) The calendar year for which the CBMA tax benefits are being 
assigned;
    (2) The TTB importer permit number or TTB-assigned reference number 
of the importer to whom the assignment is made;
    (3) The Internal Revenue Code classification of the product for 
which the assignment is made, either distilled spirits, wine, or beer;
    (4) The reduced tax rate or tax credit being assigned, either:
    (i) For distilled spirits:
    (A) The reduced tax rate of $2.70 per proof gallon on the first 
100,000 proof gallons imported in the calendar year; or
    (B) The reduced tax rate of $13.34 per proof gallon on the next 
22.13 million proof gallons imported in the calendar year;
    (ii) For wine:
    (A) The tax credit of $1 per wine gallon on the first 30,000 wine 
gallons of wine imported in the calendar year (or credit of 6.2 cents 
per wine gallon for wine classified as ``hard cider'');
    (B) The tax credit of 90 cents per wine gallon on the next 100,000 
wine gallons imported in the calendar year (or credit of 5.6 cents per 
wine gallon for wine classified as ``hard cider''); or
    (C) The tax credit of 53.5 cents per wine gallon on the next 
620,000 wine gallons imported in the calendar year (or credit of 3.3 
cents per wine gallon for wine classified as ``hard cider'');
    (iii) For beer, the reduced tax rate of $16 per barrel on the first 
6,000,000 barrels imported in the calendar year;
    (5) The quantity by proof gallons, wine gallons, or beer barrels of 
the reduced tax rate or tax credit being assigned; and
    (6) Any prescribed certifications attesting to the submitter's 
authority and the submitter's acknowledgement of statutory limitations 
on the quantities of assignments that may be made; and
    (7) Any additional information required by the appropriate TTB 
officer on a case-by-case basis to administer CBMA.
    (c) Limitations--(1) General. Quantities that may be assigned are 
limited to the number of proof gallons, wine gallons, and beer barrels 
in paragraph (b)(4) of this section, and also cannot exceed the 
quantities of the foreign producer's distilled spirits, wine, and beer 
that are reasonably projected to be imported into the United States 
during the specified calendar year by the importer receiving the 
assignment.
    (2) Controlled group rules. Foreign and/or domestic producers under 
common ownership are grouped together when applying the quantity 
limitations in paragraph (c)(1) of this section. The quantity 
limitations apply to:
    (i) Foreign and/or domestic producers in a ``parent-subsidiary 
controlled group,'' as defined in 26 U.S.C. 1563 and as modified by 26 
U.S.C. 5051(5)(A)-(B);
    (ii) Foreign and/or domestic producers in a ``brother-sister 
controlled group,'' as defined in 26 U.S.C. 1563 and as modified by 26 
U.S.C. 5051(5)(A)-(B);
    (iii) Foreign and/or domestic producers in a ``combined group,'' as 
defined in 26 U.S.C. 1563 and as modified by 26 U.S.C. 5051(5)(A)-(B);
    (iv) Shared ownership structures similar to those described in 
paragraphs (c)(2)(i) through (iii) of this section, but where one or 
more producers under common ownership is not a corporation.
    (d) Timing. Assignments of CBMA tax benefits may be submitted to 
TTB beginning no earlier than October 1st of the calendar year prior to 
the year for which the CBMA tax benefits are to be

[[Page 58034]]

assigned. Assignments of CBMA tax benefits must be submitted on or 
before December 31st of the calendar year for which the CBMA tax 
benefits are assigned.
    (e) Changes to assignments. Once made, a foreign producer may not 
revoke or reduce an assignment of CBMA tax benefits unless the assignee 
importer has rejected the assignment.
    (f) Electronic registration required. The foreign producer must 
submit the information required by paragraph (b) of this section 
electronically using the format provided by TTB.


Sec.  27.264   CBMA import refund claim submission.

    (a) General. An importer who has elected to receive an assignment 
of CBMA tax benefits from a foreign producer may file a claim in 
accordance with this section for a partial refund of the tax paid to 
Customs and Border Protection (CBP) on alcohol produced by the 
assigning foreign producer and imported into the United States by that 
importer. Refunds are to be determined no more frequently than 
quarterly. The amount of refund is calculated as provided at 26 U.S.C. 
5001(c)(4)(B) for distilled spirits, 5041(c)(7)(B) for wine, and 
5051(a)(6)(B) for beer, on such products entered for consumption within 
the calendar quarter and for which the importer has received an 
assignment of CBMA tax benefits and paid to CBP the tax determined on 
such products.
    (b) Election to receive CBMA tax benefits. An importer who has been 
assigned CBMA tax benefits by a foreign producer is presumed to have 
elected to receive such assignment unless and until the importer 
rejects the assignment through the online system prior to filing a 
claim for a refund based on that assignment.
    (c) Information required at entry summary. To be eligible for a 
refund described in paragraph (a) of this section, the importer must 
submit electronically the information required by Sec.  27.48(a)(2) for 
distilled spirits, wines, and beer imported into the United States 
subject to tax (in satisfaction of Sec.  27.48(a)(2), an importer who 
does not have and is not required to obtain an FAA Act basic permit 
must instead submit its TTB-assigned reference number obtained under 
Sec.  27.266). The importer must also indicate its intent to claim a 
refund on the entry summaries of the consumption entries for the 
alcohol subject to the prospective claim, either at the time of entry 
summary or through post-summary correction. These entry summaries must 
include the following information for each line item to be included in 
a claim for refund, in the electronic format prescribed by CBP:
    (1) The TTB-issued Foreign Producer ID of the foreign producer who 
assigned CBMA tax benefits to the importer;
    (2) The name of the foreign producer who assigned CBMA tax benefits 
to the importer;
    (3) A statement of whether the importer is using an eligible flavor 
content credit pursuant to Sec. Sec.  27.76 and 27.77; and
    (4) An indicator or set of indicators specifying the particular 
CBMA reduced tax rate or tax credit assigned by the foreign producer of 
the alcohol.
    (d) Information required in claim submission. To submit a claim for 
a refund described in paragraph (a) of this section, the importer must 
submit and/or verify, as appropriate, within the CBMA importer refund 
claims system the following information for each consumption entry line 
item to be included in the claim:
    (1) The date of the entry for consumption;
    (2) The year of importation, if different than the year of the 
entry for consumption;
    (3) The entry summary number and the entry summary line number;
    (4) The particular CBMA reduced tax rate or tax credit assigned by 
the foreign producer of the alcohol;
    (5) The quantity of proof gallons, wine gallons, or beer barrels 
entered for consumption subject to the rate or credit identified in 
paragraph (d)(4) of this section;
    (6) The TTB-issued Foreign Producer ID of the foreign producer who 
assigned CBMA tax benefits to the importer;
    (7) The amount of tax determined and paid by the importer;
    (8) The amount of the refund sought by the importer;
    (9) Information allowing the appropriate TTB officer to arrange 
payment to the importer of the refund;
    (10) Any prescribed certifications attesting to submitter's 
authority and the truthfulness of the information submitted; and
    (11) Any additional information, as needed by TTB on a case-by-case 
basis, to administer CBMA.
    (e) Timing of claim submission. Claims under this section may be 
submitted only after the end of the calendar quarter in which the 
entries for consumption were filed. The calendar quarters end on March 
31, June 30, September 31, and December 31. Claims must be filed within 
the limitations period set forth at 26 U.S.C. 6511.
    (f) Authorization. Each person authorized to sign or act on behalf 
of the importer must be authorized pursuant to a duly executed power of 
attorney. TTB may collect additional information from the authorized 
person, as needed, to verify their identity. Such information may 
include identifying numbers (e.g., Social Security Number) as provided 
in 26 U.S.C. 6109.
    (g) Electronic filing required. To be eligible for a refund under 
this section, an importer must submit the information required by 
paragraphs (c) and (d) of this section electronically in the formats 
prescribed by CBP and TTB, respectively.


Sec.  27.266   Importer reference number.

    An importer who does not have and is not required to obtain an FAA 
Act basic permit must request and receive a reference number from the 
appropriate TTB officer before receiving assignments of CBMA tax 
benefits from foreign producers under Sec.  27.262. The importer must 
provide this reference number to any foreign producers that will assign 
CBMA tax benefits to the importer.


Sec.  27.268   Revocation of eligibility for CBMA tax benefits.

    (a) Revocation of foreign producer's eligibility. A foreign 
producer who provides erroneous or fraudulent information that the 
appropriate TTB officer determines is material to the eligibility of 
the foreign producer to assign CBMA tax benefits under Sec.  27.262 may 
have such eligibility revoked, for a period not to exceed three 
calendar years following the year of revocation, under the procedures 
set forth in paragraphs (b) through (e) of this section. If the foreign 
producer has previously had its eligibility revoked under this section, 
any subsequent revocation may instead be permanent. In any case where a 
criminal conviction results from the foreign producer's providing of 
erroneous or fraudulent information as described above, eligibility 
will be permanently revoked.
    (b) Notice of contemplated revocation. Where the appropriate TTB 
officer has reason to believe that a foreign producer, including anyone 
acting on behalf of a foreign producer, has provided erroneous or 
fraudulent information as described in paragraph (a) of this section, 
such officer will provide a written notice of contemplated revocation 
to the foreign producer. Such notice will set forth the facts and 
analysis supporting the contemplated revocation, as well as the period 
of contemplated revocation. Written notice will be provided 
electronically to persons authorized to act on behalf of the foreign 
producer

[[Page 58035]]

within the online foreign producer registration and assignment system 
as provided in Sec.  27.260.
    (c) Response to contemplated revocation. A foreign producer in 
receipt of a notice of contemplated revocation, or its representative, 
may submit a written response to the appropriate TTB officer explaining 
why the foreign producer believes the information at issue was not 
erroneous or fraudulent, or why such information is not material to the 
foreign producer qualifying for CBMA tax benefits. This response must 
be submitted within 45 days of receipt of the written notice of 
contemplated revocation and must be submitted electronically through 
means specified in such notice. Any representative of the foreign 
producer in these proceedings must be authorized by the foreign 
producer pursuant to a duly executed power of attorney or other 
document deemed acceptable to the appropriate TTB officer. If the 
foreign producer does not submit a response within 45 days, the 
appropriate TTB officer will issue an order of revocation as set forth 
in paragraph (d) of this section.
    (d) Revocation determination. Following receipt of a foreign 
producer's response to a contemplated revocation, the appropriate TTB 
officer will consider the arguments raised in the response and issue an 
order either dismissing the contemplated revocation or imposing a 
revocation as authorized under paragraph (a) of this section. Any order 
imposing revocation will set forth the facts and analysis supporting 
the revocation, taking into consideration any response provided by the 
foreign producer under paragraph (c) of this section. The order will be 
provided electronically to the foreign producer or the foreign 
producer's representative in the matter.
    (e) Review--(1) Appeal. A foreign producer may appeal an order of 
revocation issued under paragraph (d) of this section by submitting a 
written appeal to the appropriate TTB officer within 45 days of receipt 
of such order. The appeal must explain why the foreign producer 
believes its revocation is in error, supported by facts and analysis. 
The appeal must be submitted electronically through the means specified 
in the order of revocation. The appropriate TTB officer will issue a 
final decision by notifying the foreign producer within 90 days of 
receipt of the appeal whether the appeal is granted or denied, and the 
reasons for the determination. The appropriate TTB officer may extend 
this period of time once by an additional 90 days if the appropriate 
TTB officer requires additional time to consider the issues presented 
by an appeal and must notify the foreign producer of the extension 
within the initial 90-day period. If the appropriate TTB officer fails 
to issue a decision granting or denying the appeal within the 
applicable deadline, the appeal is denied and such denial will be 
considered a final decision.
    (2) Judicial review. A final decision from the appropriate TTB 
officer following appeal is required prior to application to the 
Federal courts for review of any order of revocation.
    (f) Notice to affected importers. In any instance where an order 
imposing revocation of a foreign producer's eligibility for CBMA tax 
benefits is issued under paragraph (d) of this section, the appropriate 
TTB officer will notify any importer having an assignment of CBMA tax 
benefits from that foreign producer of the revocation. In the event 
that the revocation is appealed and the appeal is granted pursuant to 
paragraph (e) of this section, the appropriate TTB officer will notify 
any importer having an assignment from that foreign producer of the 
dismissal of such revocation.

    Signed: September 14, 2022.
Mary Ryan,
Administrator.

    Approved: September 14, 2022.
Thomas C. West, Jr.,
Deputy Assistant Secretary (Tax Policy).
[FR Doc. 2022-20412 Filed 9-22-22; 8:45 am]
BILLING CODE 4810-31-P