As I'm sure most of you know by know, the Cider Act passed late last year and will go into effect on January 1, 2017. This is the law that is changing the definition of "Hard Cider" for tax purposes. (The bill itself can be found here: https://www.congress.gov/bill/114th-congress/house-bill/2029. The Cider Act portion is embedded in this larger bill.)
The quick explanation of this new law is that as of next year, the Hard Cider tax rate of $0.226 per gallon will expand to include ciders that contain less than 8.5% ABV, not more than 0.64 grams of CO2 per 100 milliliters, and contains no fruit or fruit flavoring other than apple or pear. While this may sound simple, if you happened to have attended the TTB sessions at last week's CiderCon you know this isn't as simple as it sounds.
To help clear things up I will be providing information here. To start, I have created some flow charts to help you figure out how your products are classified now, and how they will be classified next year. Keep in mind that TTB still has to write regulations based on this legal change so some questions will remain unanswered until they finish the rulemaking process.
For starters, here is a chart showing the current tax classification system. (Sorry if these are blurry - I'm not very technologically skilled. If you want clearer copies of these send me an email and I will send you pdf's.)
The quick explanation of this new law is that as of next year, the Hard Cider tax rate of $0.226 per gallon will expand to include ciders that contain less than 8.5% ABV, not more than 0.64 grams of CO2 per 100 milliliters, and contains no fruit or fruit flavoring other than apple or pear. While this may sound simple, if you happened to have attended the TTB sessions at last week's CiderCon you know this isn't as simple as it sounds.
To help clear things up I will be providing information here. To start, I have created some flow charts to help you figure out how your products are classified now, and how they will be classified next year. Keep in mind that TTB still has to write regulations based on this legal change so some questions will remain unanswered until they finish the rulemaking process.
For starters, here is a chart showing the current tax classification system. (Sorry if these are blurry - I'm not very technologically skilled. If you want clearer copies of these send me an email and I will send you pdf's.)
Now that you know how your cider should be classified at the moment, here is the chart for after the new law goes into effect on January 1, 2017:
This next chart isn't about tax classifications, but since so many questions were asked at CiderCon about labeling, COLAS and package size requirements I thought I'd throw this in as well. Keep in mind that the Cider Act doesn't have any impact on the labeling rules; what it does is create confusion for Hard Ciders between 7-8.5% ABV. At the moment, if you have a product that qualifies for the Hard Cider tax rate then you do not need a COLA and can use any size bottle, can or keg. As of next year, you may have products that qualify for the Hard Cider tax rate but need a COLA and must be packaged according to the metric standards of fill. In other words, starting next year it may be best to think of Hard Cider between 7-8.5% ABV as a slightly different animal than Hard Cider below 7%.
I hope these help. If you have any questions, or have suggestions on what to cover next let me know. Thanks, Janene.
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