,,ii  #aafth ,,congress  #ast ,session  
,s4 #cfb  ,,in ,,the ,,senate ,,of ,,the
 ,,united ,,states  ,february #f1       
#bjai,mr4 ,wyden 7for himself1 ,mr4     
,blunt1 ,mr4 ,carper1 ,mr4 ,roberts1    
,ms4 ,stabenow1 ,mr4 ,moran1 ,mr4       
,casey1 ,mr4 ,portman1 ,mr4 ,bennet1    
,mrs4 ,capito1 ,ms4 ,baldwin1 and ,mr4  
,gardner7 introduced the following bill2
 which was read twice and referred to   
the ,committee on ,finance  ,a ,,bill   
,to amend the ,internal ,revenue ,code  
of #aihf to reform taxation of alcoholic
 beverages4  #a4 ,short title ,this ,act
 may be cited as the ,craft ,beverage   
,modernization and ,tax ,reform ,act of 
#bjai4  #b4 ,permanent extension of     
certain provisions  7a7 ,production     
period for beer1 wine1 and distilled    
spirits  7#a7 ,in general ,paragraph    
7#d7 of section #bfc;,a7f7 of the       
,internal ,revenue ,code of #aihf1 as   
added by section #achja7;a7 of ,public  
,law #aae-ig1 is amended to read as     
follows3  7#d7 ,exemption for aging     

process of beer1 wine1 and distilled    
spirits ,for purposes of this           
subsection1 the production period shall 
not include the aging period for-- 7,a7 
beer 7as defined in section #ejeb7;a771 
7,b7 wine 7as described in section      
#ejda7;a771 or  7,c7 distilled spirits  
7as defined in section #ejjb7;a77#h771  
except such spirits that are unfit for  
use for beverage purposes4  4  7#b7     
,effective date ,the amendment made by  
this subsection shall apply to interest 
costs paid or accrued in calendar years 
beginning after ,december #ca1 #bjag4   
7b7 ,reduced rate of excise tax on beer 
7#a7 ,in general ,paragraph 7#a7 of     
section #ejea7;a7 of the ,internal      
,revenue ,code of #aihf1 as amended by  
section #achjb7;a7 of ,public ,law      
#aae-ig1 is amended to read as follows3 
7#a7 ,in general  7,a7 ,imposition of   
tax ,a tax is hereby imposed on all beer
 brewed or produced1 and removed for    
consumption or sale1 within the ,united 
,states1 or imported into the ,united   

,states4 ,except as provided in         
paragraph 7#b71 the rate of such tax    
shall be--  7i7 #af on the first        
#f1jjj1jjj barrels of beer-- 7,i7 brewed
 by the brewer and removed during the   
calendar year for consumption or sale1  
or  7,,ii7 imported by the importer into
 the ,united ,states during the calendar
 year1 and  7ii7 #ah on any barrels of  
beer to which clause 7i7 does not apply4
  7,b7 ,barrel ,for purposes of this    
section1 a barrel shall contain not more
 than #ca gallons of beer1 and any tax  
imposed under this section shall be     
applied at a like rate for any other    
quantity or for fractional parts of a   
barrel4  4  7#b7 ,reduced rate for      
certain domestic production             
,subparagraph 7,a7 of section           
#ejea7;a77#b7 of the ,internal ,revenue 
,code of #aihf1 as amended by section   
#achjb7;b7 of ,public ,law #aae-ig1 is  
amended--  7,a7 in the heading1 by      
inserting #c4ej a barrel before rate1   
and  7,b7 by striking #g and all that   

follows through ,january #a1 #bjbj7 and 
inserting #c4ej4  7#c7 ,application of  
reduced tax rate for foreign            
manufacturers and importers ,subsection 
7a7 of section #ejea of the ,internal   
,revenue ,code of #aihf1 as amended by  
section #achjb7;c7 of ,public ,law      
#aae-ig1 is amended--  7,a7 in          
subparagraph 7,a77i77,,ii7 of paragraph 
7#a71 as amended by paragraph 7#a7 of   
this subsection1 by inserting but only  
if the importer is an electing importer 
under paragraph 7#d7 and the barrels    
have been assigned to the importer      
pursuant to such paragraph after during 
the calendar year1 and  7,b7 in         
paragraph 7#d7-- 7i7 in subparagraph    
7,a71 by striking paragraph 7#a77;,c7   
and inserting paragraph 7#a77;,a71 and  
7ii7 in subparagraph 7,b71 by striking  
,the ,secretary and inserting ,the      
,secretary of the ,treasury1 in         
consultation with the ,secretary of     
,health and ,human ,services and the    
,secretary of the ,department of        

,homeland ,security14  7#d7 ,controlled 
group and single taxpayer rules         
,paragraph 7#e7 of section #ejea7;a7 of 
the ,internal ,revenue ,code of #aihf1  
as amended by section #achjb7;d7 of     
,public ,law #aae-ig1 is amended by     
striking paragraph 7#a77;,c77i7 each    
place it appears and inserting paragraph
 7#a77;,a77i74  7#e7 ,effective date    
,the amendments made by this subsection 
shall apply to beer removed after       
,december #ca1 #bjag4  7c7 ,transfer of 
beer between bonded facilities  7#a7 ,in
 general ,section #edad of the ,internal
 ,revenue ,code of #aihf1 as amended by 
section #achjc7;a7 of ,public ,law      
#aae-ig1 is amended to read as follows3 
#edad4 ,transfer of beer between bonded 
facilities  7a7 ,in general ,beer may be
 removed from one brewery to another    
brewery1 without payment of tax1 and may
 be mingled with beer at the receiving  
brewery1 subject to such conditions1    
including payment of the tax1 and in    
such containers1 as the ,secretary by   

regulations shall prescribe1 which shall
 include--  7#a7 any removal from one   
brewery to another brewery belonging to 
the same brewer1  7#b7 any removal from 
a brewery owned by one corporation to a 
brewery owned by another corporation    
when--  7,a7 one such corporation owns  
the controlling interest in the other   
such corporation1 or  7,b7 the          
controlling interest in each such       
corporation is owned by the same person 
or persons1 and  7#c7 any removal from  
one brewery to another brewery when--   
7,a7 the proprietors of transferring and
 receiving premises are independent of  
each other and neither has a proprietary
 interest1 directly or indirectly1 in   
the business of the other1 and  7,b7 the
 transferor has divested itself of all  
interest in the beer so transferred and 
the transferee has accepted             
responsibility for payment of the tax4  
7b7 ,transfer of liability for tax ,for 
purposes of subsection 7a77#c71 such    
relief from liability shall be effective

 from the time of removal from the      
transferor's bonded premises1 or from   
the time of divestment of interest1     
whichever is later4  4  7#b7 ,effective 
date ,the amendment made by this        
subsection shall apply to any calendar  
quarters beginning after ,december #ca1 
#bjag4  7d7 ,reduced rate of excise tax 
on certain wine  7#a7 ,in general       
,section #ejda7;c7 of the ,internal     
,revenue ,code of #aihf1 as amended by  
section #achjd of ,public ,law #aae-ig1 
is amended--  7,a7 in the heading1 by   
striking for small domestic producers1  
7,b7 by amending paragraph 7#a7 to read 
as follows3  7#a7 ,allowance of credit  
7,a7 ,in general ,there shall be allowed
 as a credit against any tax imposed by 
this title 7other than chapters #b1 #ba1
 and #bb7 an amount equal to the sum    
of--  7i7 #a per wine gallon on the     
first #cj1jjj wine gallons of wine1 plus
  7ii7 #ij cents per wine gallon on the 
first #ajj1jjj wine gallons of wine to  
which clause 7i7 does not apply1 plus   

7iii7 #ec4e cents per wine gallon on the
 first #fbj1jjj wine gallons of wine to 
which clauses 7i7 and 7ii7 do not apply1
  which are produced by the producer and
 removed during the calendar year for   
consumption or sale1 or which are       
imported by the importer into the       
,united ,states during the calendar     
year4  7,b7 ,adjustment of credit for   
hard cider ,in the case of wine         
described in subsection 7b77#f71        
subparagraph 7,a7 of this paragraph     
shall be applied--  7i7 in clause 7i7 of
 such subparagraph1 by substituting #f4b
 cents for #a1  7ii7 in clause 7ii7 of  
such subparagraph1 by substituting #e4f 
cents for #ij cents1 and  7iii7 in      
clause 7iii7 of such subparagraph1 by   
substituting #c4c cents for #ec4e cents4
  1  7,c7 by striking paragraphs 7#b7   
and 7#h71  7,d7 by redesignating        
paragraphs 7#c7 through 7#f7 as         
paragraphs 7#b7 through 7#e71           
respectively1  7,e7 by redesignating    
paragraph 7#i7 as paragraph 7#f71 and   

7,f7 by amending paragraph 7#g7 to read 
as follows3  7#g7 ,regulations ,the     
,secretary may prescribe such           
regulations as may be necessary to carry
 out the purposes of this subsection1   
including regulations to ensure proper  
calculation of the credit provided in   
this subsection4  4  7#b7 ,allowance of 
credit for foreign manufacturers and    
importers ,subsection 7c7 of section    
#ejda of the ,internal ,revenue ,code of
 #aihf1 as amended by paragraph 7#a71 is
 amended--  7,a7 in subparagraph 7,a7 of
 paragraph 7#a71 by inserting but only  
if the importer is an electing importer 
under paragraph 7#f7 and the wine       
gallons of wine have been assigned to   
the importer pursuant to such paragraph 
after into the ,united ,states during   
the calendar year1 and  7,b7 in         
paragraph 7#f7-- 7i7 in subparagraph    
7,a71 by striking paragraph 7#h7 and    
inserting paragraph 7#a71  7ii7 in      
subparagraph 7,b71 by striking ,the     
,secretary and inserting ,the ,secretary

 of the ,treasury1 in consultation with 
the ,secretary of ,health and ,human    
,services and the ,secretary of the     
,department of ,homeland ,security11 and
  7iii7 in subparagraph 7,c71 by        
striking paragraph 7#d7 and inserting   
paragraph 7#c74  7#c7 ,effective date   
,the amendments made by this subsection 
shall apply to wine removed after       
,december #ca1 #bjag4  7e7 ,adjustment  
of alcohol content level for application
 of excise tax rates  7#a7 ,in general  
,paragraphs 7#a7 and 7#b7 of section    
#ejda7;b7 of the ,internal ,revenue     
,code of #aihf1 as amended by section   
#achje of ,public ,law #aae-ig1 are each
 amended by striking #ad percent and all
 that follows through ,january #a1 #bjbj
 and inserting #af percent4  7#b7       
,effective date ,the amendments made by 
this subsection shall apply to wine     
removed after ,december #ca1 #bjag4  7f7
 ,definition of mead and low alcohol by 
volume wine  7#a7 ,in general           
,subsection 7h7 of section #ejda of the 

,internal ,revenue ,code of #aihf1 as   
added by section #achjf of ,public ,law 
#aae-ig1 is amended--  7,a7 in paragraph
 7#b71 by striking the ,secretary shall 
each place it appears and inserting the 
,secretary may1 and  7,b7 by striking   
paragraph 7#c74  7#b7 ,effective date   
,the amendments made by this subsection 
shall apply to wine removed after       
,december #ca1 #bjag4  7g7 ,reduced rate
 of excise tax on certain distilled     
spirits  7#a7 ,in general ,subsection   
7c7 of section #ejja of the ,internal   
,revenue ,code of #aihf1 as added by    
subsection 7a7 of section #achjg of     
,public ,law #aae-ig and amended by     
subsection 7c7 of such section1 is      
amended--  7,a7 in the heading1 by      
striking for #bjah and #bjai1  7,b7 in  
paragraph 7#c77;,b71 by striking ,the   
,secretary and inserting ,the ,secretary
 of the ,treasury1 in consultation with 
the ,secretary of ,health and ,human    
,services and the ,secretary of the     
,department of ,homeland ,security11 and

  7,c7 by striking paragraph 7#d74  7#b7
 ,effective date ,the amendments made by
 this subsection shall apply to         
distilled spirits removed after         
,december #ca1 #bjag4  7h7 ,bulk        
distilled spirits  7#a7 ,in general     
,section #ebab of the ,internal ,revenue
 ,code of #aihf1 as amended by section  
#achjh of ,public ,law #aae-ig1 is      
amended--  7,a7 by striking the last two
 sentences1  7,b7 by striking ,bulk     
distilled spirits on which and inserting
 ,distilled spirits on which1 and  7,c7 
by striking bulk distilled spirits for  
and inserting distilled spirits for4    
7#b7 ,effective date ,the amendments    
made by this subsection shall apply to  
distilled spirits transferred in bond   
after ,december #ca1 #bjag4  7i7        
,simplification of rules regarding      
records1 statements1 and returns  7#a7  
,in general ,subsection 7a7 of section  
#eeee of the ,internal ,revenue ,code of
 #aihf is amended by striking ,for      
calendar quarters beginning after the   

date of the enactment of this sentence1 
and before ,january #a1 #bjbj1 the      
,secretary and inserting ,the           
,secretary4  7#b7 ,effective date ,the  
amendments made by this subsection shall
 apply to any calendar quarters         
beginning after ,february #i1 #bjah4    
#c4 ,use of wholesome products suitable 
for human food consumption in the       
production of fermented beverages  7a7  
,in general ,not later than the date    
that is #a year after the date of the   
enactment of this ,act1 the ,secretary  
of the ,treasury or the ,secretary of   
the ,treasury's delegate shall amend    
subpart ,f of part #be of subchapter ,a 
of chapter ,i of title #bg1 ,code of    
,federal ,regulations1 to ensure that1  
for purposes of such part1 wholesome    
fruits1 vegetables1 and spices suitable 
for human food consumption that are     
generally recognized as safe for use in 
an alcoholic beverage and that do not   
contain alcohol are generally recognized
 as a traditional ingredient in the     

production of fermented beverages4  7b7 
,definition ,for purposes of this       
section1 the term fruit means whole     
fruit1 fruit juices1 fruit puree1 fruit 
extract1 or fruit concentrate4  7c7     
,rule of construction ,nothing in this  
section shall be construed to revoke1   
prescribe1 or limit any other exemptions
 from the formula requirements under    
subpart ,f of part #be of subchapter ,a 
of chapter ,i of title #bg1 ,code of    
,federal ,regulations1 for any          
ingredient that has been recognized     
before1 on1 or after the date of the    
enactment of this ,act as a traditional 
ingredient in the production of         
fermented beverages4  #d4 ,increased    
funding for the ,alcohol and ,tobacco   
,tax and ,trade ,bureau  7a7 ,in general
 ,in addition to any other amounts      
authorized to be appropriated to the    
,alcohol and ,tobacco ,tax and ,trade   
,bureau1 there is authorized to be      
appropriated--  7#a7 for fiscal year    
#bjai1 #ae1jjj1jjj1 to remain available 

until ,september #cj1 #bjbj2 and  7#b7  
for fiscal year #bjbj1 #ae1jjj1jjj1 to  
remain available until ,september #cj1  
#bjba4  7b7 ,availability of funds ,of  
the amounts authorized to be            
appropriated under subsection 7a71 for  
each of fiscal years #bjai and #bjbj--  
7#a7 #e1jjj1jjj shall be for the costs  
of accelerating the processing of       
formula and label applications2  7#b7   
#e1jjj1jjj shall be for the costs of    
programs to enforce trade practice      
violations of the ,federal ,alcohol     
,administration ,act 7#bg ,u4,s4,c4 #bja
 et seq472 and  7#c7 #e1jjj1jjj shall be
 for the purpose of carrying out the    
provisions of this ,act and the         
amendments made by this ,act1 including 
accelerating the processing of permit   
applications for non-industrial alcohol 
production and distribution4