Industry Circulars 2023-1

March 30, 2023
Number: 2023 – 1

Alternate Procedure for Submission of CBMA Importer Claims

1. Purpose

The Alcohol and Tobacco Tax and Trade Bureau (TTB) is issuing this Industry Circular to provide an alternate procedure for alcohol importers to file refund claims to obtain Craft Beverage Modernization Act (CBMA) tax benefits.  TTB regulations require that importers submit information necessary for their claim through U.S. Customs and Border Protection’s (CBP’s) Automated Commercial Environment (ACE) and TTB’s online CBMA Importer Claims System.[1]  This Industry Circular provides an alternate procedure for submitting claim information in certain circumstances where importers are unable to add or correct data in ACE.    

Through this Industry Circular, TTB is authorizing an alternate procedure under which, in several specific circumstances, importers may submit CBMA refund claims by uploading the relevant customs entry summary data in TTB’s online system rather than relying on data retrieved by the TTB CBMA Importer Claims system from ACE.  Importers uploading their entry summary data through the alternate procedure authorized here must indicate any needed corrections to their data and provide certain supporting documentation with their claim.  Importers may only use this alternate procedure in the scenarios described in Section 4 of this Industry Circular.  These scenarios, and the related required supporting documentation, are summarized in Appendix A.

2. Background

The CBMA provisions of the U.S. Internal Revenue Code provide for reduced tax rates or tax credits for beer, wine, and distilled spirits produced in or imported into the United States.[2]  These CBMA tax benefits are limited in quantity for each producer, including foreign producers.  Foreign producers utilize CBMA tax benefits by assigning them to U.S. importers of their products.  U.S. importers pay the Federal excise tax on imported beer, wine, and distilled spirits, and must receive an assignment of the CBMA tax benefits from the foreign producer to take advantage of the CBMA tax benefits.

The CBMA tax benefits for imported alcohol were originally administered by CBP.  A change in the law transferred responsibility for administering the CBMA tax benefits for imported alcohol to TTB from CBP beginning with products entered or withdrawn for consumption in the United States on or after January 1, 2023.[3]  The law also changed the way in which importers take advantage of tax benefits assigned to them.  As of January 1, 2023, these importers must pay the full tax rate to CBP[4] and then subsequently submit a claim to TTB for a refund.

TTB’s regulations establish the procedures for foreign producers to assign CBMA tax benefits to importers and for importers to submit refund claims to TTB to obtain those tax benefits.  See 27 CFR part 27, subpart P. 

TTB administers these regulations through two components of an online system, “myTTB.”  Using the Foreign Producer Registration and Assignment System in myTTB, foreign producers register with TTB, receive a TTB-issued Foreign Producer ID, and assign CBMA tax benefits to importers.  Importers use the CBMA Importer Claims System in myTTB to view and manage CBMA tax benefits assigned to them by foreign producers, and to submit refund claims based on those assignments and the information they submitted in their customs filings in ACE.

3. Required Data for Claims and Alternate Procedure

 TTB’s regulations set forth the information that an importer must provide in its customs filings to be eligible for a CBMA refund claim.  See 27 CFR 27.264(c).  These regulations provide that such information must be submitted electronically in the format prescribed by CBP.  The electronic format currently prescribed by CBP for the data described at 27 CFR 27.264(c)(1)-(4) consists of the ACE entry and entry summary.  With the exception of a few elements that must be included in the entry filing (for example, the TTB importer permit number), the prescribed information must be submitted in the entry summary or through an update to the ACE data called a post-summary correction (PSC).[5]

TTB’s CBMA Importer Claims System relies both on the tax benefit assignments that foreign producers submit in myTTB and the CBMA-related information that importers submit in ACE in their entry and entry summary filings.  The CBMA Importer Claims System retrieves information from those systems and presents it to importers for their review.  Importers prepare a claim by selecting which entry summary lines to include, and then submit the claim to TTB through the system (this is referred to in this document as the “regular claim procedure”).  All required ACE data must be complete and correct for the regular claim procedure, as TTB relies on ACE data to verify that the importer has a valid assignment of CBMA tax benefits from the foreign producer covering the products for which they seek a refund. 

TTB understands, however, that in certain, limited situations it is not possible for an importer to submit the required information in ACE—or to update missing or incorrect information via PSC.  In these situations, the importer would not be able to fully follow the regulations at 27 CFR 27.264 to provide the information necessary to support the refund claim.  The importer will not be able to use the regular claim procedure for these situations because the importer will not be able to include in a claim any ACE entry summary lines that have missing or incorrect information.

As a general matter, TTB may authorize importers to use alternate methods or procedures, instead of those specifically prescribed by regulation, where TTB finds the following conditions:    

(1) Good cause has been shown for the use of the alternate method or procedure;

(2) The alternate method or procedure is within the purpose of, and consistent with, the effect intended by the specifically prescribed method or procedure, and affords equivalent security to the revenue; and

(3) The alternate method or procedure will not be contrary to any provision of law, and will not result in an increase in cost to the Government or hinder the effective administration of the regulations.

See 27 CFR 27.221. 

In the specific situations described in Section 4 of this Industry Circular, TTB has determined that these conditions are met and will allow importers to use an alternate procedure for submitting CBMA refund claims via myTTB. 

Under this alternate procedure, importers will submit the information required for their CBMA refund claims by uploading in the CBMA Importer Claims System the relevant ACE data, with any necessary corrections, as well as supporting documentation demonstrating the importer’s eligibility for the alternate procedure.  This alternate procedure will provide importers a way to submit complete and correct information to TTB in the limited situations where they are unable to submit or correct the required information in ACE.   

4. Alternate Procedure Scenarios and Required Supporting Documentation

TTB is authorizing the use of this alternate procedure for filing CBMA refund claims for the scenarios described below.  Under this alternate procedure, importers will upload the complete and correct entry and entry summary data required by TTB regulations directly into the CBMA Importer Claims System.  Importers must also submit any additional supporting documentation associated with the reason for using the alternate procedure, as described below.  TTB may request additional supporting documentation on a case-by-case basis as needed to verify a claim. 

To upload their required entry and entry summary data, importers will generate a report called the TTB CBMA ACE Report, which captures the importer’s existing ACE data (including any incomplete or incorrect data) for one or more entry summary lines in a format that the importer can add to or correct prior to submission to TTB.  The importer must insert any missing information or corrections in the Report, and submit the corrected Report in the CBMA Importer Claims System.  For example, if an importer is using this alternate procedure because they provided an incorrect TTB importer permit number in their customs entry filing and were unable to update it in ACE, they will need to provide the correct permit number by adding it to the Report before submitting the corrected Report to TTB as part of their claim. 

Detailed instructions for generating, correcting, and uploading the TTB CBMA ACE Report, and for uploading the supporting documents for a claim under this alternate procedure, are provided in the myTTB CBMA Importer Claims System under the “manual claims submission” heading.  Related guidance and user guides are also available on TTB’s website.   A summary of all routinely-required documentation for each scenario is included in Appendix A.

a. Alcohol Imported Prior to 2023 but Entered for Consumption in 2023 or Later

For alcohol imported prior to 2023—including alcohol entered for warehousing and deposited in a customs bonded warehouse or admitted into a foreign trade zone—but entered or withdrawn for consumption in 2023 or later, the importer will need to submit its CBMA refund claim under this alternate procedure because the required CBMA tax benefit assignment information cannot be submitted in ACE. 

While TTB administers refunds of CBMA tax benefits for alcohol entered or withdrawn for consumption on or after January 1, 2023, that alcohol may have been imported prior to January 1, 2023.  CBMA tax benefits are assigned for the calendar year of importation, not the calendar year of entry for consumption.  That is, for an importer to be eligible to claim CBMA tax benefits, the alcohol they import must be covered by an assignment from the foreign producer that applied to the year of importation, which may be prior to the year of the consumption entry.

As explained in Section 2 of this Industry Circular, CBP administered the CBMA tax benefits on imported products entered or withdrawn for consumption prior to January 1, 2023.  CBP applied different procedures to document a foreign producer’s assignment of CBMA tax benefits to the importer during that time.  The CBP documentation did not include certain elements now required by TTB, such as the TTB-issued Foreign Producer ID.  As such, an importer who imported alcohol prior to 2023 will not have a tax benefit assignment for that alcohol in myTTB, and will be unable to provide in their entry summary all the information required by TTB’s regulations pertaining to the foreign producer’s assignment of CBMA tax benefits.  Because information will be missing in both myTTB and ACE, TTB’s Importer Refund Claims System will not be able to retrieve and present any applicable entry summary lines as part of the regular claim procedure.  As a result, importers seeking to file a CBMA refund claim with TTB on alcohol imported prior to 2023 must submit those claims under this alternate procedure.

Along with the TTB CBMA ACE Report, as additional supporting documentation, the importer must upload the documentation required by CBP for CBMA claims made during the year of the importation, that is: the “CBMA Spreadsheet,” “Controlled Group Spreadsheet,” and “Assignment Certification” that were required by CBP in prior years.  See CSMS #50484790 - Craft Beverage Modernization Act (CBMA) – 2022 Procedures and Requirements (govdelivery.com).  This information is necessary for TTB to verify that the importer has a valid assignment from the foreign producer for CBMA tax benefits that have not already been claimed with CBP. 

For example, if alcohol was imported in 2022, deposited in a customs bonded warehouse for storage in 2022, and then withdrawn for consumption in 2023, the importer of that alcohol would need to submit as supporting documentation the 2022 CBMA Spreadsheet(s) and 2022 Controlled Group Spreadsheet(s) they created and maintained to satisfy CBP’s requirements for any CBMA tax benefits taken on any other products imported and entered for consumption in 2022.  The importer would also need to submit the 2022 Assignment Certification from the foreign producer of the alcohol in the format previously required by CBP. 

b. Missing or Incorrect TTB Importer Permit Number

Under TTB regulations, an importer must provide its TTB importer permit number in ACE during the customs entry process.  If an importer does not do so, or provides an incorrect number, and the number cannot be subsequently added or corrected in ACE, the importer will need to submit its CBMA refund claim under this alternate procedure. 

The TTB importer permit number generally must be provided in connection with any importation of alcohol products, and is specifically required to be submitted electronically in ACE when an importer intends to claim a refund based on CBMA tax benefits.[6]  The TTB importer permit number is necessary to link an importer’s entry summary data to tax benefit assignments.  If the permit number is not provided in ACE, or if the permit number entered in ACE does not match the permit number to which the foreign producer assigned CBMA tax benefits, the CBMA Importer Claims System cannot retrieve the entry summary information and make it available for an importer’s claim submission under the regular claim procedure. 

Although most CBMA data elements can be updated in ACE through a PSC prior to filing a claim, the TTB importer permit number cannot be updated once an entry summary is filed.  If the importer has already filed an entry summary and missed their opportunity to correct a permit number deficiency, the importer will need to submit any claim(s) on the affected entry summary lines using this alternate procedure. 

Along with the TTB CBMA ACE Report with corrected permit numbers, as additional supporting documentation, the importer must provide a statement identifying the deficiency with the permit number in the ACE data and confirming the correct permit number for the importation(s). 

c. Entry Liquidated with Missing or Incorrect Data (other than the TTB Permit Number)

When an importer’s entry or entry summary contain errors relevant to a prospective CBMA refund claim that are not discovered until after the entry has liquidated, the importer will be unable to update the information in ACE and will need to submit its CBMA refund claim under this alternate procedure. 

Under CBP regulations, liquidations refer to the final computation of duties on entries for consumption.  See 19 CFR 159.1.  Once an entry has liquidated, its entry summary can no longer be updated through a PSC.  As a result, an entry that liquidates with missing or incorrect ACE data may not be retrieved by the CBMA Importer Claims System, or may be retrieved but will reflect incorrect data.  In either case, the importer must submit any claim(s) based on the affected entry summary lines using this alternate procedure.[7] 

Along with the TTB CBMA ACE Report, as additional supporting documentation, the importer must provide a statement explaining what data was missing or incorrect in the liquidated entry or entry summary (which has been added or corrected in the TTB CBMA ACE Report). 

d. System Error

While TTB does not specifically anticipate any data transfer errors between ACE and the CBMA Importer Claims System, TTB is preparing for the possibility—however unlikely—that a system error could prevent an importer from submitting a claim through the regular claim procedure even though the importer has completely and correctly provided all required information in ACE.  Accordingly, where an importer’s complete and correct ACE entry and entry summary data does not appear in the CBMA Importer Claims System, or appears with information that is inconsistent with what the importer has provided in ACE, the importer may submit any claim(s) on the affected entry summary lines using this alternate procedure. 

Along with the TTB CBMA ACE Report, as additional supporting documentation, the importer must provide a statement either explaining that the entry does not appear in the CBMA Importer Claims System or, if the entry does appear but is inconsistent with the ACE data, identifying what information is erroneous in the CBMA Importer Claims System. 

5. Specific Approval to Use Alternate Procedure

TTB recognizes the possibility that additional circumstances may arise on a case-by-case basis where an importer is unable to submit a refund claim using the regular claim procedure in the CBMA Importer Claims System.  If an importer believes they need to use this alternate procedure to submit a claim in scenarios not addressed in Section 4, the importer must request specific approval to use this alternate procedure, pursuant to 27 CFR 27.221. 

Such requests can be submitted electronically to TTB’s Regulations and Rulings Division (RRD) by uploading a signed copy of the request through the RRD contact form.  Requests should explain in detail the circumstances causing the need to use this alternate claims procedure and why the importer believes those circumstances demonstrate good cause to use the alternate procedure.  If TTB approves a request, the requirements to prepare, correct, and submit the TTB CBMA ACE Report will apply.  TTB may also require additional supporting documentation appropriate to the circumstances. 

Questions.  If you have any questions concerning this Industry Circular, please contact the Regulations and Rulings Division at 202-453-2265 or use the RRD contact form.

Mary G. Ryan
Administrator
Alcohol and Tobacco Tax and Trade Bureau

Appendix A – Summary of Required Documents 

[1] For additional information on these requirements, see T.D. TTB-186, “Implementation of Refund Procedures for Craft Beverage Modernization Act Federal Excise Tax Benefits Applicable to Imported Alcohol.”

[2] See Public Law 115-97, sections 13801-13808 (CBMA provisions of the law commonly known as the Tax Cuts and Jobs Act).

[3] See Section 107(e) & (f) of the Tax Relief Act of 2020 (Pub. L. 116-260, Division EE) (134 Stat. 3048).

[4] Internal revenue taxes payable on imported distilled spirits, wines, and beer are collected, accounted for, and deposited as internal revenue collections by CBP in accordance with CBP requirements.  27 CFR 27.48(a)(1).  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.

[5] For more information about the PSC process, see CBP’s website at https://www.cbp.gov/trade/programs-administration/entry-summary/post-summary-correction.

[6] See 27 CFR 27.48(a)(2), 27.264(c).  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 27 CFR 27.266.

[7] Note that if the affected entry summary lines are subject to a pending protest with CBP pursuant to 19 U.S.C. 1514, the protest decision must be made prior to filing a claim under this alternate procedure.