49–010 

Calendar No. 40 

114TH CONGRESS REPORT " ! SENATE 1st Session 114–17 

CIDER INVESTMENT AND DEVELOPMENT THROUGH 

EXCISE TAX REDUCTION (CIDER) ACT 

APRIL 14, 2015.—Ordered to be printed 

Mr. HATCH, from the Committee on Finance, 

submitted the following 

R E P O R T 

[To accompany S. 906] 

The Committee on Finance, having considered an original bill, S. 

906, to amend the Internal Revenue Code of 1986 to modify the 

types of wines taxed as hard cider, having considered the same, reports favorably thereon without amendment and recommends that 

the bill do pass. 

CONTENTS 

Page 

I. LEGISLATIVE BACKGROUND ..................................................................... 1 

II. EXPLANATION OF THE BILL ...................................................................... 2 

A. Modification of Definition of Hard Cider (sec. 2 of the bill and 

sec. 5041 of the Code) ........................................................................ 2 

B. Increase Continuous Levy Authority on Payments to Medicare 

Providers and Suppliers .................................................................... 4 

III. BUDGET EFFECTS OF THE BILL ............................................................... 6 

IV. VOTES OF THE COMMITTEE ...................................................................... 8 

V. REGULATORY IMPACT AND OTHER MATTERS ..................................... 8 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED 9 

I. LEGISLATIVE BACKGROUND 

The Committee on Finance, having considered S. 906, the ‘‘Cider 

Investment and Development through Excise Tax Reduction 

(CIDER) Act,’’ to amend the Internal Revenue Code of 1986 to modify the types of wines taxed as hard cider, reports favorably thereon 

without amendment and recommends that the bill do pass. 


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1Secs. 5001 (distilled spirits), 5041 (wines), and 5051 (beer). Unless otherwise stated, all section references are to the Internal Revenue Code of 1986, as amended (the ‘‘Code’’). 2Secs. 5006, 5043, and 5054. In general, proprietors of distilled spirit plants, proprietors of 

bonded wine cellars, brewers, and importers are liable for the tax. 

Background and need for legislative action 

Background.—Based on a proposal recommended by Senator 

Schumer, and on S. 1531 (113th Congress) cosponsored by Senators 

Schumer, Leahy, Casey, Collins, Manchin, Merkley and Shaheen, 

the Committee on Finance marked up original legislation (a bill to 

amend the Internal Revenue Code of 1986 to modify the types of 

wines taxed as hard cider) on February 11, 2015, and, with a majority present, ordered the bill favorably reported. 

Need for legislative action.—Still wine derived primarily from apples or pears, or from apple juice or pear juice concentrate and 

water with alcohol by volume of seven percent or more, and wine 

derived primarily from apples or pears, or from apple juice or pear 

juice concentrate and water containing more than 3.92 grams of 

carbon dioxide per liter or more are taxed at $1.07 to $3.15 and 

$3.30 to $3.40 per wine gallon respectively. An expanded definition 

of hard cider that would allow a higher carbonation level and a 

higher level of alcohol by volume and would include pear juice or 

pear juice concentrate and water in addition to apples and apple 

juice concentrate would encourage investment and development in 

the apple and pear hard cider markets. 

In addition, it has been reported that many thousands of Medicare providers and suppliers have outstanding Federal employment 

and income tax liability, which contribute to the tax gap. The permissible percentage of payments to a Medicare provider subject to 

levy should be increased. 

II. EXPLANATION OF THE BILL 

A. MODIFICATION OF DEFINITION OF HARD CIDER (SEC. 2 OF THE

BILL AND SEC. 5041 OF THE CODE) 

PRESENT LAW

An excise tax is imposed on all distilled spirits, wine, and beer 

produced in, or imported into, the United States.1 The tax liability 

legally comes into existence the moment the alcohol is produced or 

imported but payment of the tax is not required until a subsequent 

withdrawal or removal from the distillery, winery, brewery, or, in 

the case of an imported product, from customs custody or bond.2


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3 A ‘‘proof gallon’’ is a U.S. liquid gallon of proof spirits, or the alcoholic equivalent thereof. 

Generally a proof gallon is a U.S. liquid gallon consisting of 50 percent alcohol. On lesser quantities, the tax is paid proportionately. Credits are allowed for wine content and flavors content 

of distilled spirits. Sec. 5010. 4Small domestic wine producers (i.e., those producing not more than 250,000 wine gallons in a calendar year) are allowed a credit of $0.90 per wine gallon ($0.056 per wine gallon in the 

case of hard cider) on the first 100,000 wine gallons (other than champagne and other sparkling 

wines) removed. The credit is reduced by one percent for each 1,000 wine gallons produced in 

excess of 150,000 wine gallons per calendar year. 5 A ‘‘wine gallon’’ is a U.S. gallon of liquid measure equivalent to the volume of 231 cubic 

inches. On lesser quantities, the tax is paid proportionately. 6Sec. 5001(a)(4). 

7 A small domestic brewer (one who produces not more than 2 million barrels in a calendar year) is subject to a per barrel rate of $7.00 on the first 60,000 barrels produced in that year. 8 A ‘‘barrel’’ contains not more than 31 gallons, each gallon equivalent to the volume of 231 

cubic inches. On lesser quantities, the tax is paid proportionately. 9Sec. 5041(b)(6). 

Distilled spirits, wine, and beer produced or imported into the 

United States are taxed at the following rates per specified volumetric measure: 

Item Current tax rate 

Distilled Spirits ............................................................................................. $13.50 per proof gallon 3

Wine: 4

Still Wines: 

Not more than 14 percent alcohol ............................................. $1.07 per wine gallon 5

More than 14 percent but not more than 21 percent alcohol .. $1.57 per wine gallon 

More than 21 percent but not more than 24 percent alcohol .. $3.15 per wine gallon 

More than 24 percent alcohol .................................................... Taxed as distilled spirits 6 ($13.50 per proof 

gallon) 

Hard cider ............................................................................................ $0.226 per wine gallon 

Sparkling Wines: 

Champagne and other naturally sparkling wines ..................... $3.40 per wine gallon 

Artificially carbonated wines ...................................................... $3.30 per wine gallon 

Beer 7 ............................................................................................................ $18.00 per barrel 8

Hard cider is a still wine derived primarily from apples or apple 

concentrate and water, containing no other fruit product, and containing at least one-half of one percent and less than seven percent 

alcohol by volume.9 Still wines are wines containing not more than 

0.392 grams of carbon dioxide per hundred milliliters of wine. 

Other wines made from apples, apple concentrate or other fruit 

products are taxed at the rates applicable in accordance with the 

alcohol and carbon dioxide content of the wine. 

REASONS FOR CHANGE

Still wine derived primarily from apples or pears, or from apple 

juice or pear juice concentrate and water with alcohol by volume 

of seven percent or more, and wine derived primarily from apples 

or pears, or from apple juice or pear juice concentrate and water 

containing more than 3.92 grams of carbon dioxide per liter or 

more are taxed at $1.07 to $3.15 and $3.30 to $3.40 per wine gallon 

respectively. 

The Committee believes that in order to encourage investment 

and development in the apple and pear hard cider markets, it is 

appropriate to expand the definition of hard cider to allow a higher 

carbonation level and a higher level of alcohol by volume and to include pear juice or pear juice concentrate and water in addition to 

apples and apple juice concentrate and water. 


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10Sec. 6331(a). Levy specifically refers to the legal process by which the IRS orders a third 

party to turn over property in its possession that belongs to the delinquent taxpayer named in 

a notice of levy. 11 Ibid. 12Sec. 6334. 13Sec. 6331(d). 14Sec. 6330. The notice and the hearing are referred to collectively as the CDP requirements. 15Secs. 6331(e) and 6343. 16Sec. 6321. 17Secs. 6331(d)(3) and 6861. 

EXPLANATION OF PROVISION

The provision would amend the definition of hard cider to mean 

a wine with a carbonation level that does not exceed 0.64 grams 

of carbon dioxide per hundred milliliters of wine. Additionally, the 

provision would expand the hard cider definition to include pears, 

or pear juice concentrate in addition to apples and apple juice concentrate and water. Under the provision, the Secretary may, by 

regulation, prescribe tolerance to the limitation as may be reasonably necessary in good commercial practice. The provision would 

change the allowable alcohol content of cider to at least one-half of 

one percent and less than 8.5 percent alcohol by volume. 

EFFECTIVE DATE

The provision applies to articles removed after December 31, 

2015. 

B. INCREASE CONTINUOUS LEVY AUTHORITY ON PAYMENTS TO

MEDICARE PROVIDERS AND SUPPLIERS

PRESENT LAW

In general 

Levy is the administrative authority of the IRS to seize a taxpayer’s property, or rights to property, to pay the taxpayer’s tax liability.10 Generally, the IRS is entitled to seize a taxpayer’s property by levy if a Federal tax lien has attached to such property,11

the property is not exempt from levy,12 and the IRS has provided 

both notice of intention to levy 13 and notice of the right to an administrative hearing (the notice is referred to as a ‘‘collections due 

process notice’’ or ‘‘CDP notice’’ and the hearing is referred to as 

the ‘‘CDP hearing’’) 14 at least 30 days before the levy is made. A 

levy on salary or wages generally is continuously in effect until released.15 A Federal tax lien arises automatically when: (1) a tax assessment has been made; (2) the taxpayer has been given notice of 

the assessment stating the amount and demanding payment; and 

(3) the taxpayer has failed to pay the amount assessed within 10 

days after the notice and demand.16

The notice of intent to levy is not required if the Secretary finds 

that collection would be jeopardized by delay. The standard for determining whether jeopardy exists is similar to the standard applicable when determining whether assessment of tax without following the normal deficiency procedures is permitted.17

The CDP notice (and pre-levy CDP hearing) is not required if: (1) 

the Secretary finds that collection would be jeopardized by delay; 

(2) the Secretary has served a levy on a State to collect a Federal 

tax liability from a State tax refund; (3) the taxpayer subject to the 

levy requested a CDP hearing with respect to unpaid employment 


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18Sec. 6330(f). 19Pub. L. No. 105–34. 20Sec. 6331(h)(3). 21Pub. L. No. 113–295, Division B. 

taxes arising in the two-year period before the beginning of the taxable period with respect to which the employment tax levy is 

served; or (4) the Secretary has served a Federal contractor levy. 

In each of these four cases, however, the taxpayer is provided an 

opportunity for a hearing within a reasonable period of time after 

the levy.18

Federal payment levy program 

To help the IRS collect taxes more effectively, the Taxpayer Relief Act of 1997 19 authorized the establishment of the Federal Payment Levy Program (‘‘FPLP’’), which allows the IRS to continuously 

levy up to 15 percent of certain ‘‘specified payments’’ by the Federal 

government if the payees are delinquent on their tax obligations. 

With respect to payments to vendors of goods, services, or property 

sold or leased to the Federal government, the continuous levy may 

be up to 100 percent of each payment.20 For payments to Medicare 

providers and suppliers, the levy is up to 15 percent for payments 

made within 180 days after December 19, 2014. For payments 

made after that date, the levy is up to 30 percent.21

Under FPLP, the IRS matches its accounts receivable records 

with Federal payment records maintained by Treasury’s Bureau of 

Fiscal Service (‘‘BFS’’), such as certain Social Security benefit and 

Federal wage records. When these records match, the delinquent 

taxpayer is provided both the notice of intention to levy and the 

CDP notice. If the taxpayer does not respond after 30 days, the IRS 

can instruct BFS to levy the taxpayer’s Federal payments. Subsequent payments are continuously levied until such time that the 

tax debt is paid or the IRS releases the levy. 

REASONS FOR CHANGE

It has been reported that many thousands of Medicare providers 

and suppliers have outstanding Federal employment and income 

tax liability, which contribute to the tax gap. Consequently, the 

Committee believes that it is appropriate to increase the permissible percentage of payments to a Medicare provider subject to levy. 

EXPLANATION OF PROVISION

The provision provides that the present limitation of 30 percent 

of certain specified payments be increased by an amount sufficient 

to offset the estimated revenue loss of the provision described in 

Part A, above. 

EFFECTIVE DATE

The provision is effective for payments made after 180 days after 

the date of enactment. 


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III. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATES

In compliance with paragraph 11(a) of rule XXVI of the Standing 

Rules of the Senate, the following statement is made concerning 

the estimated budget effects of the revenue provision of the ‘‘Cider 

Investment and Development through Excise Tax Reduction 

(CIDER) Act’’ as reported. 

The provision is estimated to have the following effect on Federal 

fiscal year budget receipts for the period 2015–2025. 


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22Pub. L. No. 93–344. 

B. BUDGET AUTHORITY AND TAX EXPENDITURES

Budget authority 

In compliance with section 308(a)(1) of the Congressional Budget 

and Impoundment Control Act of 1974 (‘‘Budget Act’’),22 the Committee states that no provisions of the bill as reported involve new 

or increased budget authority. 

Tax expenditures 

In compliance with section 308(a)(1) of the Budget Act, the Committee states that the provisions of the bill have a negligible effect 

on tax expenditures (see revenue table in part A., above). 

C. CONSULTATION WITH CONGRESSIONAL BUDGET OFFICE

In accordance with section 403 of the Budget Act, the Committee 

advises that the Congressional Budget Office has not submitted a 

statement on the bill. The letter from the Congressional Budget Office will be provided separately. 

IV. VOTES OF THE COMMITTEE 

In compliance with paragraph 7(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee states that, with a majority 

present, the ‘‘Cider Investment and Development through Excise 

Tax Reduction (CIDER) Act,’’ was ordered favorably reported by 

voice vote on February 11, 2015. 

V. REGULATORY IMPACT AND OTHER MATTERS 

A. REGULATORY IMPACT

Pursuant to paragraph 11(b) of rule XXVI of the Standing Rules 

of the Senate, the Committee makes the following statement concerning the regulatory impact that might be incurred in carrying 

out the provisions of the bill. 

Impact on individuals and businesses, personal privacy and paperwork 

The bill modifies the types of wines taxed as hard cider. It also 

increases the IRS’s continuous levy authority on payments to Medicare providers and suppliers. The provisions of the bill are not expected to impose additional administrative requirements or regulatory burdens on individuals or businesses. 

The provisions of the bill do not impact personal privacy. 

B. UNFUNDED MANDATES STATEMENT

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104–4). 

The Committee has determined that the tax provisions of the reported bill do not contain Federal private sector mandates or Federal intergovernmental mandates on State, local, or tribal governments within the meaning of Public Law 104–4, the Unfunded 

Mandates Reform Act of 1995. 


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C. TAX COMPLEXITY ANALYSIS

Section 4022(b) of the Internal Revenue Service Reform and Restructuring Act of 1998 (‘‘IRS Reform Act’’) requires the staff of the 

Joint Committee on Taxation (in consultation with the Internal 

Revenue Service and the Treasury Department) to provide a tax 

complexity analysis. The complexity analysis is required for all legislation reported by the Senate Committee on Finance, the House 

Committee on Ways and Means, or any committee of conference if 

the legislation includes a provision that directly or indirectly 

amends the Internal Revenue Code and has widespread applicability to individuals or small businesses. The staff of the Joint 

Committee on Taxation has determined that there are no provisions that are of widespread applicability to individuals or small 

businesses. 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

In the opinion of the Committee, it is necessary in order to expedite the business of the Senate, to dispense with the requirements 

of paragraph 12 of rule XXVI of the Standing Rules of the Senate 

(relating to the showing of changes in existing law made by the bill 

as reported by the Committee). 

Æ 


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