Congress Passes the CIDER Act

Tuesday, January 5, 2016

On December 18, 2015, the Federal government passed the CIDER Act, which provides a much needed update to the tax and regulatory framework applicable to the production of hard cider. Under the Act, hard ciders with up to 8.5 percent alcohol by volume will fall under the definition of "hard cider" and be regulated as such instead of being subject to the Alcohol and Tobacco Tax and Trade Bureau's wine labeling and packaging requirements. In addition, the Act lowers the tax burden on hard cider producers by expanding the definition of hard cider to include higher alcohol content ciders and by increasing the amount of carbonation allowed in hard cider before it is taxed at a higher rate that applies to champagne.

Why is this relevant now? The CIDER Act amends portions of the Internal Revenue Code (26 USC Section 5041) to modify the definition of "hard cider" such that the alcohol by volume content of hard cider may reach 8.5% before crossing the line into the category of wine.This change, along with others made by the Act, is expected to save hard cider producers substantial amounts of Federal excise taxes going forward.

How else am I affected? As a result of the Act, hard cider producers will need to review their excise tax filings to ensure they are reporting productions and removal of hard cider in the appropriate categories. Further, hard cider producers should monitor advisories issued by the Federal government as they will provide additional clarification on the implementation of the Act.

What should I do now? We feel it is appropriate to determine whether your operation is affected by developments resulting from the passage of the Act. Like other recent changes to the Federal and State alcoholic beverage laws, the developments resulting from the Act may provide expanded opportunities for hard cider production business, provided compliance requirements are met. Once this determination is made, you can assess whether changes to operations and/or additional licensing are needed to pursue your future plans.

If you have any questions or would like to discuss this further, please contact Zachary R.Benjamin at (315) 422-1152.

Costello, Cooney & Fearon, PLLC has provided expert and diverse legal services to Syracuse and surrounding communities for more than 100 years.