II 

114TH CONGRESS 

1ST SESSION S. 1562 

To amend the Internal Revenue Code of 1986 to reform taxation of alcoholic 

beverages. 

IN THE SENATE OF THE UNITED STATES 

JUNE 11, 2015 

Mr. WYDEN introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to reform 

taxation of alcoholic beverages. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS; RULE OF 

4 CONSTRUCTION. 

5 (a) SHORT TITLE.—This Act may be cited as the 

6 ‘‘Craft Beverage Modernization and Tax Reform Act of 

7 2015’’. 

8 (b) TABLE OF CONTENTS.—The table of contents of 

9 this Act is as follows: 

Sec. 1. Short title; table of contents; rule of construction. 

TITLE I—BONDING AND CAPITALIZATION REQUIREMENTS 


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Sec. 101. Removal of bond requirements and extending filing periods for certain taxpayers with limited excise tax liability. 

Sec. 102. Production period for beer, wine, and distilled spirits. 

TITLE II—BEER 

Sec. 201. Reduced rate of excise tax on beer. 

Sec. 202. Use of wholesome products suitable for human food consumption in 

the production of fermented beverages. 

Sec. 203. Simplification of rules regarding records, statements, and returns. 

Sec. 204. Transfer of beer between bonded facilities. 

TITLE III—HARD CIDER 

Sec. 301. Modification of definition of hard cider. 

TITLE IV—WINE 

Sec. 401. Reduced rate of excise tax on wine produced domestically by certain 

qualifying producers. 

Sec. 402. Adjustment of alcohol content level for application of excise tax rates. 

TITLE V—DISTILLED SPIRITS 

Sec. 501. Reduced rate of excise tax on certain distilled spirits. 

Sec. 502. Exemption of home distillery establishments from certain taxation 

and bonding requirements. 

TITLE VI—PROGRAM INTEGRITY AND EXCISE TAX 

ADMINISTRATION 

Sec. 601. Program Integrity Cap Adjustment for the Alcohol and Tobacco Tax 

and Trade Bureau. 

Sec. 602. Increase information sharing to administer excise taxes. 

1 (c) RULE OF CONSTRUCTION.—Nothing in this Act, 

2 the amendments made by this Act, or any regulation pro3 mulgated under this Act or the amendments made by this 

4 Act, shall be construed to preempt, supersede, or other5 wise limit or restrict any State, local, or tribal law that 

6 prohibits or regulates the production or sale of distilled 

7 spirits, wine, or malt beverages. 


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1 TITLE I—BONDING AND CAP2 ITALIZATION REQUIREMENTS 

3 SEC. 101. REMOVAL OF BOND REQUIREMENTS AND EX4 TENDING FILING PERIODS FOR CERTAIN 

5 TAXPAYERS WITH LIMITED EXCISE TAX LI6 ABILITY. 

7 (a) FILING REQUIREMENTS.—Paragraph (4) of sec8 tion 5061(d) of the Internal Revenue Code of 1986 is 

9 amended— 

10 (1) in subparagraph (A)— 

11 (A) by striking ‘‘In the case of’’ and in12 serting the following: 

13 ‘‘(i) MORE THAN $1,000 AND NOT

14 MORE THAN $50,000 IN TAXES.—Except as 

15 provided in clause (ii), in the case of’’, 

16 (B) by striking ‘‘under bond for deferred 

17 payment’’, and 

18 (C) by adding at the end the following new 

19 clause: 

20 ‘‘(ii) NOT MORE THAN $1,000 IN

21 TAXES.—In the case of any taxpayer who 

22 reasonably expects to be liable for not 

23 more than $1,000 in taxes imposed with 

24 respect to distilled spirits, wines, and beer 

25 under subparts A, C, and D and section 


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1 7652 for the calendar year and who was 

2 liable for not more than $1,000 in such 

3 taxes in the preceding calendar year, the 

4 last day for the payment of tax on with5 drawals, removals, and entries (and arti6 cles brought into the United States from 

7 Puerto Rico) shall be the 14th day after 

8 the last day of the calendar year.’’, and 

9 (2) in subparagraph (B)— 

10 (A) by striking ‘‘Subparagraph (A)’’ and 

11 inserting the following: 

12 ‘‘(i) EXCEEDS $50,000 LIMIT.—Sub13 paragraph (A)(i)’’, and 

14 (B) by adding at the end the following new 

15 clause: 

16 ‘‘(ii) EXCEEDS $1,000 LIMIT.—Sub17 paragraph (A)(ii) shall not apply to any 

18 taxpayer for any portion of the calendar 

19 year following the first date on which the 

20 aggregate amount of tax due under sub21 parts A, C, and D and section 7652 from 

22 such taxpayer during such calendar year 

23 exceeds $1,000, and any tax under such 

24 subparts which has not been paid on such 

25 date shall be due on the 14th day after the 


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1 last day of the calendar quarter in which 

2 such date occurs.’’. 

3 (b) BOND REQUIREMENTS.— 

4 (1) IN GENERAL.—Section 5551 of such Code 

5 is amended— 

6 (A) in subsection (a), by striking ‘‘No indi7 vidual’’ and inserting ‘‘Except as provided 

8 under subsection (d), no individual’’, and 

9 (B) by adding at the end the following new 

10 subsection: 

11 ‘‘(d) REMOVAL OF BOND REQUIREMENTS.— 

12 ‘‘(1) IN GENERAL.—During any period to which 

13 subparagraph (A) of section 5061(d)(4) applies to a 

14 taxpayer (determined after application of subpara15 graph (B) thereof), such taxpayer shall not be re16 quired to furnish any bond covering operations or 

17 withdrawals of distilled spirits or wines for non18 industrial use or of beer. 

19 ‘‘(2) SATISFACTION OF BOND REQUIRE20 MENTS.—Any taxpayer for any period described in 

21 paragraph (1) shall be treated as if sufficient bond 

22 has been furnished for purposes of covering oper23 ations and withdrawals of distilled spirits or wines 

24 for nonindustrial use or of beer for purposes of any 

25 requirements relating to bonds under this chapter.’’. 


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1 (2) CONFORMING AMENDMENTS.— 

2 (A) BONDS FOR DISTILLED SPIRITS

3 PLANTS.—Section 5173(a) of such Code is 

4 amended— 

5 (i) in paragraph (1), by striking ‘‘No 

6 person’’ and inserting ‘‘Except as provided 

7 under section 5551(d), no person’’, and 

8 (ii) in paragraph (2), by striking ‘‘No 

9 distilled spirits’’ and inserting ‘‘Except as 

10 provided under section 5551(d), no dis11 tilled spirits’’. 

12 (B) BONDED WINE CELLARS.—Section 

13 5351 of such Code is amended— 

14 (i) by striking ‘‘Any person’’ and in15 serting the following: 

16 ‘‘(a) IN GENERAL.—Any person’’, 

17 (ii) by inserting ‘‘, except as provided 

18 under section 5551(d),’’ before ‘‘file bond’’, 

19 (iii) by striking ‘‘Such premises shall’’ 

20 and all that follows through the period, 

21 and 

22 (iv) by adding at the end the following 

23 new subsection: 

24 ‘‘(b) DEFINITIONS.—For purposes of this chapter— 


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1 ‘‘(1) BONDED WINE CELLAR.—The term ‘bond2 ed wine cellar’ means any premises described in sub3 section (a), including any such premises established 

4 by a taxpayer described in section 5551(d). 

5 ‘‘(2) BONDED WINERY.—At the discretion of 

6 the Secretary, any bonded wine cellar that engages 

7 in production operations may be designated as a 

8 ‘bonded winery’.’’. 

9 (C) BONDS FOR BREWERIES.—Section 

10 5401 of such Code is amended by adding at the 

11 end the following new subsection: 

12 ‘‘(c) EXCEPTION FROM BOND REQUIREMENTS FOR

13 CERTAIN BREWERIES.—Subsection (b) shall not apply to 

14 any taxpayer for any period described in section 

15 5551(d).’’. 

16 (c) EFFECTIVE DATE.—The amendments made by 

17 this section shall take effect on the date that is 1 year 

18 after the date of the enactment of this Act. 

19 SEC. 102. PRODUCTION PERIOD FOR BEER, WINE, AND DIS20 TILLED SPIRITS. 

21 (a) IN GENERAL.—Section 263A(f) of the Internal 

22 Revenue Code of 1986 is amended— 

23 (1) by redesignating paragraph (4) as para24 graph (5), and 


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1 (2) by inserting after paragraph (3) the fol2 lowing new paragraph: 

3 ‘‘(4) EXEMPTION FOR AGING PROCESS OF FIN4 ISHED BEER, WINE, AND DISTILLED SPIRITS.—For 

5 purposes of this section, the production period shall 

6 not include the aging period for— 

7 ‘‘(A) beer (as defined in section 5052(a)), 

8 ‘‘(B) wine (as described in section 

9 5041(a)), or 

10 ‘‘(C) distilled spirits (as defined in section 

11 5002(a)(8)), except such spirits that are unfit 

12 for use for beverage purposes.’’. 

13 (b) CONFORMING AMENDMENT.—Paragraph 

14 (5)(B)(ii) of section 263A(f) of the Internal Revenue Code 

15 of 1986, as redesignated by this section, is amended by 

16 inserting ‘‘except as provided in paragraph (4),’’ before 

17 ‘‘ending on the date’’. 

18 (c) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to production periods beginning 

20 after December 31, 2016. 

21 TITLE II—BEER 

22 SEC. 201. REDUCED RATE OF EXCISE TAX ON BEER. 

23 (a) IN GENERAL.—Paragraph (1) of section 5051(a) 

24 of the Internal Revenue Code of 1986 is amended to read 

25 as follows: 


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1 ‘‘(1) IN GENERAL.— 

2 ‘‘(A) IMPOSITION OF TAX.—A tax is here3 by imposed on all beer brewed or produced, and 

4 removed for consumption or sale, within the 

5 United States, or imported into the United 

6 States. Except as provided in paragraph (2), 

7 the rate of such tax shall be— 

8 ‘‘(i) $16 on the first 6,000,000 barrels 

9 of beer which are removed during the cal10 endar year for consumption or sale by a 

11 brewer or imported into the United States 

12 in such year by an importer, and 

13 ‘‘(ii) $18 on any barrels of beer to 

14 which clause (i) does not apply. 

15 ‘‘(B) BARREL.—For purposes of this sec16 tion, a barrel shall contain not more than 31 

17 gallons of beer, and any tax imposed under this 

18 section shall be applied at a like rate for any 

19 other quantity or for fractional parts of a bar20 rel.’’. 

21 (b) REDUCED RATE FOR CERTAIN DOMESTIC PRO22 DUCTION.—Subparagraph (A) of section 5051(a)(2) of the 

23 Internal Revenue Code of 1986 is amended— 

24 (1) in the heading, by striking ‘‘$7’’ and insert25 ing ‘‘$3.50’’, and 


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1 (2) by striking ‘‘$7’’ and inserting ‘‘$3.50’’. 

2 (c) CONFORMING AMENDMENTS.—Section 

3 5051(a)(2)(B) of the Internal Revenue Code of 1986 is 

4 amended by inserting ‘‘the 6,000,000 barrel quantity spec5 ified in paragraph (1)(A)(i) and’’ before ‘‘the 2,000,000 

6 barrel quantity’’. 

7 (d) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to beer removed during calendar 

9 years beginning after December 31, 2016. 

10 SEC. 202. USE OF WHOLESOME PRODUCTS SUITABLE FOR 

11 HUMAN FOOD CONSUMPTION IN THE PRO12 DUCTION OF FERMENTED BEVERAGES. 

13 (a) IN GENERAL.—Not later than the date that is 

14 1 year after the date of the enactment of this Act, the 

15 Secretary of the Treasury or the Secretary of the Treas16 ury’s delegate shall amend subpart F of part 25 of sub17 chapter A of chapter I of title 27, Code of Federal Regula18 tions to ensure that, for purposes of such part, wholesome 

19 fruits, vegetables, and spices suitable for human food con20 sumption that are generally recognized as safe for use in 

21 an alcoholic beverage and that do not contain alcohol are 

22 generally recognized as a traditional ingredient in the pro23 duction of fermented beverages. 


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1 (b) DEFINITION.—For purposes of this section, the 

2 term ‘‘fruit’’ means whole fruit, fruit juices, fruit puree, 

3 fruit extract, or fruit concentrate. 

4 (c) RULE OF CONSTRUCTION.—Nothing in this sec5 tion shall be construed to revoke, prescribe, or limit any 

6 other exemptions from the formula requirements under 

7 subpart F of part 25 of subchapter A of chapter I of title 

8 27, Code of Federal Regulations for any ingredient that 

9 has been recognized before, on, or after the date of the 

10 enactment of this Act as a traditional ingredient in the 

11 production of fermented beverages. 

12 SEC. 203. SIMPLIFICATION OF RULES REGARDING 

13 RECORDS, STATEMENTS, AND RETURNS. 

14 (a) IN GENERAL.—Subsection (a) of section 5555 of 

15 the Internal Revenue Code of 1986 is amended by adding 

16 at the end the following: ‘‘The Secretary shall permit a 

17 person to employ a unified system for any records, state18 ments, and returns required to be kept, rendered, or made 

19 under this section for any beer produced in the brewery 

20 for which the tax imposed by section 5051 has been deter21 mined, including any beer which has been removed for 

22 consumption on the premises of the brewery.’’. 

23 (b) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to any calendar quarters beginning 


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1 more than 1 year after the date of the enactment of this 

2 Act. 

3 SEC. 204. TRANSFER OF BEER BETWEEN BONDED FACILI4 TIES. 

5 (a) IN GENERAL.—Section 5414 of the Internal Rev6 enue Code of 1986 is amended to read as follows: 

7 ‘‘SEC. 5414. TRANSFER OF BEER BETWEEN BONDED FACILI8 TIES. 

9 ‘‘(a) IN GENERAL.—Beer may be removed from one 

10 brewery to another bonded brewery, without payment of 

11 tax, and may be mingled with beer at the receiving brew12 ery, subject to such conditions, including payment of the 

13 tax, and in such containers, as the Secretary by regula14 tions shall prescribe, which shall include— 

15 ‘‘(1) any removal from one brewery to another 

16 brewery belonging to the same brewer, 

17 ‘‘(2) any removal from a brewery owned by one 

18 corporation to a brewery owned by another corpora19 tion when— 

20 ‘‘(A) one such corporation owns the con21 trolling interest in the other such corporation, 

22 or 

23 ‘‘(B) the controlling interest in each such 

24 corporation is owned by the same person or per25 sons, and 


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1 ‘‘(3) any removal from one brewery to another 

2 brewery when— 

3 ‘‘(A) the proprietors of transferring and 

4 receiving premises are independent of each 

5 other and neither has a proprietary interest, di6 rectly or indirectly, in the business of the other, 

7 and 

8 ‘‘(B) the transferor has divested itself of 

9 all interest in the beer so transferred and the 

10 transferee has accepted responsibility for pay11 ment of the tax. 

12 ‘‘(b) TRANSFER OF LIABILITY FOR TAX.—For pur13 poses of subsection (a)(3), such relief from liability shall 

14 be effective from the time of removal from the transferor’s 

15 bonded premises, or from the time of divestment of inter16 est, whichever is later.’’. 

17 (b) REMOVAL FROM BREWERY BY PIPELINE.—Sec18 tion 5412 of the Internal Revenue Code of 1986 is amend19 ed by inserting ‘‘pursuant to section 5414 or’’ before ‘‘by 

20 pipeline’’. 

21 (c) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to any calendar quarters beginning 

23 more than 1 year after the date of the enactment of this 

24 Act. 


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1 TITLE III—HARD CIDER 

2 SEC. 301. MODIFICATION OF DEFINITION OF HARD CIDER. 

3 (a) IN GENERAL.—Section 5041 of the Internal Rev4 enue Code of 1986 is amended— 

5 (1) in paragraph (6) of subsection (b), by strik6 ing ‘‘which is a still wine’’ and all that follows 

7 through ‘‘alcohol by volume’’, and 

8 (2) by adding at the end the following new sub9 section: 

10 ‘‘(g) HARD CIDER.—For purposes of subsection 

11 (b)(6), the term ‘hard cider’ means a wine— 

12 ‘‘(1) containing not more than 0.64 gram of 

13 carbon dioxide per hundred milliliters of wine, except 

14 that the Secretary may by regulations prescribe such 

15 tolerances to this limitation as may be reasonably 

16 necessary in good commercial practice, 

17 ‘‘(2) which is derived primarily from— 

18 ‘‘(A) apples, apple juice concentrate, pears, 

19 or pear juice concentrate, and 

20 ‘‘(B) water, 

21 ‘‘(3) which contains no fruit product or fruit 

22 flavoring other than apple or pear, and 

23 ‘‘(4) which contains at least one-half of 1 per24 cent and less than 8.5 percent alcohol by volume.’’. 


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1 (b) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to hard cider removed during cal3 endar years beginning after December 31, 2016. 

4 TITLE IV—WINE 

5 SEC. 401. REDUCED RATE OF EXCISE TAX ON WINE PRO6 DUCED DOMESTICALLY BY CERTAIN QUALI7 FYING PRODUCERS. 

8 (a) IN GENERAL.—Section 5041(c) of the Internal 

9 Revenue Code of 1986 is amended— 

10 (1) by amending paragraph (1) to read as fol11 lows: 

12 ‘‘(1) ALLOWANCE OF CREDIT.— 

13 ‘‘(A) IN GENERAL.—Except as provided in 

14 paragraph (2), there shall be allowed as a credit 

15 against any tax imposed by this title (other 

16 than chapters 2, 21, and 22) an amount equal 

17 to the sum of— 

18 ‘‘(i) $1 per wine gallon on the first 

19 30,000 wine gallons of wine, plus 

20 ‘‘(ii) 90 cents per wine gallon on the 

21 first 100,000 wine gallons of wine to which 

22 clause (i) does not apply, 

23 on wine gallons which are removed during such 

24 year for consumption or sale and which have 


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1 been produced at qualified facilities in the 

2 United States. 

3 ‘‘(B) ADJUSTMENT OF CREDIT FOR HARD

4 CIDER.—In the case of wine described in sub5 section (b)(6), subparagraph (A) of this para6 graph shall be applied— 

7 ‘‘(i) in clause (i) of such subpara8 graph, by substituting ‘6.2 cents’ for ‘$1’, 

9 and 

10 ‘‘(ii) in clause (ii) of such subpara11 graph, by substituting ‘5.6 cents’ for ‘90 

12 cents’. 

13 ‘‘(C) DENIAL OF CREDIT FOR CHAMPAGNE

14 AND OTHER SPARKLING WINES.—This para15 graph shall not apply to wines described in sub16 section (b)(4).’’, 

17 (2) in paragraph (2)— 

18 (A) by striking ‘‘paragraph (1)’’ and in19 serting ‘‘clause (ii) of paragraph (1)(A)’’, and 

20 (B) by striking ‘‘1,000 wine gallons of 

21 wine produced in excess of 150,000 wine gal22 lons’’ and inserting ‘‘10,000 wine gallons of 

23 wine produced in excess of 1,000,000 wine gal24 lons’’, and 

25 (3) in paragraph (7)— 


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1 (A) in subparagraph (A), by striking ‘‘this 

2 subsection from benefiting any person who pro3 duces more than 250,000 wine gallons’’ and in4 serting ‘‘paragraph (1)(A)(ii) from benefitting 

5 any person who produces more than 2,000,000 

6 wine gallons’’, and 

7 (B) in subparagraph (B), by striking 

8 ‘‘150,000 wine gallons’’ and inserting 

9 ‘‘1,000,000 wine gallons’’. 

10 (b) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to wine removed during calendar 

12 years beginning after December 31, 2016. 

13 SEC. 402. ADJUSTMENT OF ALCOHOL CONTENT LEVEL FOR 

14 APPLICATION OF EXCISE TAX RATES. 

15 (a) IN GENERAL.—Paragraphs (1) and (2) of section 

16 5041(b) of the Internal Revenue Code of 1986 are amend17 ed by striking ‘‘14 percent’’ each place it appears and in18 serting ‘‘14.25 percent’’. 

19 (b) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to wine removed during calendar 

21 years beginning after December 31, 2016. 


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1 TITLE V—DISTILLED SPIRITS 

2 SEC. 501. REDUCED RATE OF EXCISE TAX ON CERTAIN DIS3 TILLED SPIRITS. 

4 (a) IN GENERAL.—Section 5001 of the Internal Rev5 enue Code of 1986 is amended by redesignating subsection 

6 (c) as subsection (d) and by inserting after subsection (b) 

7 the following new subsection: 

8 ‘‘(c) REDUCED RATE.— 

9 ‘‘(1) IN GENERAL.—In the case of a distilled 

10 spirits operation, the otherwise applicable tax rate 

11 under subsection (a)(1) on the first 100,000 of proof 

12 gallons of distilled spirits which are removed in the 

13 calendar year and which have been distilled or proc14 essed by such operation at a qualified facility in the 

15 United States shall be $2.70 per proof gallon. 

16 ‘‘(2) CONTROLLED GROUPS.— 

17 ‘‘(A) IN GENERAL.—In the case of a con18 trolled group, the 100,000 proof gallon quantity 

19 specified in paragraph (1) shall be applied to 

20 the controlled group. 

21 ‘‘(B) DEFINITION.—For purposes of sub22 paragraph (A), the term ‘controlled group’ shall 

23 have the meaning given such term by subsection 

24 (a) of section 1563, except that— 


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1 ‘‘(i) ‘more than 50 percent’ shall be 

2 substituted for ‘at least 80 percent’ each 

3 place it appears in such subsection, and 

4 ‘‘(ii) such determination shall be made 

5 without regard to section 1563(b)(2)(C). 

6 ‘‘(C) RULES FOR NON-CORPORATIONS.— 

7 Under regulations prescribed by the Secretary, 

8 principles similar to the principles of subpara9 graphs (A) and (B) shall be applied to a group 

10 under common control where one or more of the 

11 persons is not a corporation. 

12 ‘‘(D) SINGLE TAXPAYER.—Pursuant to 

13 rules issued by the Secretary, any distilled spir14 its operation which produces distilled spirits 

15 marketed under a similar brand, license, fran16 chise, or other arrangement shall be treated as 

17 a single taxpayer for purposes of the application 

18 of this paragraph.’’. 

19 (b) CONFORMING AMENDMENT.—Section 7652(f)(2) 

20 of the Internal Revenue Code of 1986 is amended by strik21 ing ‘‘section 5001(a)’’ and inserting ‘‘sections 5001(a)(1) 

22 and 5001(c)(1)’’. 

23 (c) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to distilled spirits removed in cal25 endar years beginning after December 31, 2016. 


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1 SEC. 502. EXEMPTION OF HOME DISTILLERY ESTABLISH2 MENTS FROM CERTAIN TAXATION AND BOND3 ING REQUIREMENTS. 

4 (a) IN GENERAL.—Section 5001 of the Internal Rev5 enue Code of 1986, as amended by section 501, is amend6 ed by redesignating subsection (d) as subsection (e), and 

7 by inserting after subsection (c) the following new sub8 section: 

9 ‘‘(d) EXEMPTION FOR DISTILLED SPIRITS PRO10 DUCED AT A HOME DISTILLERY ESTABLISHMENT.—Sub11 ject to regulations prescribed by the Secretary, the tax im12 posed by subsection (a) shall not apply to distilled spirits 

13 produced at a home distillery establishment (as defined 

14 in section 5002(a)(16)).’’. 

15 (b) DEFINITION OF HOME DISTILLERY ESTABLISH16 MENT.—Section 5002(a) of the Internal Revenue Code of 

17 1986 is amended by adding at the end the following new 

18 paragraph: 

19 ‘‘(16) HOME DISTILLERY ESTABLISHMENT.— 

20 ‘‘(A) IN GENERAL.—The term ‘home dis21 tillery establishment’ means an establishment 

22 that— 

23 ‘‘(i) is located in the dwelling house of 

24 the owner of such establishment or in any 

25 shed, yard, enclosure, or other property 

26 connected with such dwelling house, and 


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1 ‘‘(ii) produces distilled spirits solely 

2 for personal or family use by the owner of 

3 such establishment. 

4 ‘‘(B) PERSONAL OR FAMILY USE.— 

5 ‘‘(i) IN GENERAL.—A home distillery 

6 establishment shall be treated as producing 

7 distilled spirits for personal or family use 

8 if— 

9 ‘‘(I) any stills or distilling 

10 apparatuses contained in such estab11 lishment have a mash capacity of not 

12 greater than 15.5 gallons, 

13 ‘‘(II) such establishment pro14 duces no more than— 

15 ‘‘(aa) in the case of a house16 hold with 1 adult, 24 proof gal17 lons of distilled spirits during the 

18 calendar year, or 

19 ‘‘(bb) in the case of a house20 hold with 2 or more adults, 48 

21 proof gallons of distilled spirits 

22 during the calendar year, and 

23 ‘‘(III) no distilled spirits pro24 duced by such establishment are sold 

25 to any person, or transferred to any 


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1 person (for payment or otherwise) for 

2 sale by such person. 

3 ‘‘(ii) ADULT.—For purposes of this 

4 paragraph, the term ‘adult’ means an indi5 vidual who has attained 18 years of age, or 

6 the minimum age (if any) established by 

7 law applicable in the locality in which the 

8 household is situated at which distilled 

9 spirits may be sold to individuals, which10 ever is greater.’’. 

11 (c) EXEMPTION FROM ESTABLISHMENT REQUIRE12 MENTS.—Section 5171 of the Internal Revenue Code of 

13 1986 is amended— 

14 (1) in subsection (a), by striking ‘‘Except as 

15 otherwise provided by law’’ and inserting ‘‘Except as 

16 provided by subsection (e) or any other provision of 

17 law’’, and 

18 (2) by redesignating subsection (e) as sub19 section (f), and by inserting after subsection (d) the 

20 following new subsection: 

21 ‘‘(e) EXCEPTION FOR HOME DISTILLERY ESTAB22 LISHMENT.—The requirements of this section shall not 

23 apply in the case of a home distillery establishment (as 

24 described in section 5002(a)(16)).’’. 


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1 (d) CRIMINAL PENALTIES.—Paragraph (6) of section 

2 5601(a) of the Internal Revenue Code of 1986 is amended 

3 by inserting ‘‘or section 5171(e)’’ after ‘‘5178(a)(1)(C)’’. 

4 (e) LIMITATION ON SALES FOR PERSONAL OR FAM5 ILY USE.—Section 5101 of such Code is amended— 

6 (1) by redesignating subsection (b) as sub7 section (c), and 

8 (2) by inserting after subsection (a) the fol9 lowing new subsection: 

10 ‘‘(b) LIMITATION ON SALES FOR HOME DISTILLERY

11 ESTABLISHMENTS.—The Secretary shall, pursuant to reg12 ulations, require that no still, boiler, or other vessel with 

13 a mash capacity of greater than 15.5 gallons be sold or 

14 transferred to any person who intends to use such still, 

15 boiler, or vessel solely as part of a home distillery estab16 lishment (as described in section 5002(a)(16)).’’. 

17 (f) EFFECTIVE DATE.—The amendments made by 

18 this section shall take effect on the date that is 1 year 

19 after the date of the enactment of this Act. 


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1 TITLE VI—PROGRAM INTEGRITY 

2 AND EXCISE TAX ADMINIS3 TRATION 

4 SEC. 601. PROGRAM INTEGRITY CAP ADJUSTMENT FOR 

5 THE ALCOHOL AND TOBACCO TAX AND 

6 TRADE BUREAU. 

7 Section 251(b)(2) of the Balanced Budget and Emer8 gency Deficit Control Act of 1985 (2 U.S.C. 901(b)(2)) 

9 is amended by adding at the end the following new sub10 paragraphs: 

11 ‘‘(E) ENFORCEMENT AND COMPLIANCE AC12 TIVITIES CONDUCTED BY THE ALCOHOL AND

13 TOBACCO TAX AND TRADE BUREAU.— 

14 ‘‘(i) IN GENERAL.—If a bill or joint 

15 resolution is enacted making appropria16 tions for a fiscal year to the Alcohol and 

17 Tobacco Tax and Trade Bureau of not less 

18 than the first amount specified in sub19 clauses (I) through (VI) of clause (ii) for 

20 tax activities for that fiscal year, including 

21 tax compliance to address the Federal tax 

22 gap (taxes owed but not paid), and pro23 vides an additional appropriation for tax 

24 activities, including tax compliance to ad25 dress the Federal tax gap, the adjustment 


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1 shall be the amount of the additional ap2 propriation, except that the adjustment 

3 shall not exceed the second amount speci4 fied in that subclause. 

5 ‘‘(ii) AMOUNTS SPECIFIED.—The 

6 amounts specified are— 

7 ‘‘(I) for fiscal year 2016, an ap8 propriation of $101,000,000, and an 

9 additional appropriation of 

10 $5,000,000; 

11 ‘‘(II) for fiscal year 2017, an ap12 propriation of $103,000,000, and an 

13 additional appropriation of 

14 $9,000,000; 

15 ‘‘(III) for fiscal year 2018, an 

16 appropriation of $106,000,000, and 

17 an additional appropriation of 

18 $14,000,000; 

19 ‘‘(IV) for fiscal year 2019, an ap20 propriation of $108,000,000, and an 

21 additional appropriation of 

22 $18,000,000; 

23 ‘‘(V) for fiscal year 2020, an ap24 propriation of $111,000,000, and an 


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1 additional appropriation of 

2 $24,000,000; and 

3 ‘‘(VI) for fiscal year 2021, an ap4 propriation of $113,000,000, and an 

5 additional appropriation of 

6 $24,000,000. 

7 ‘‘(iii) DEFINITIONS.—As used in this 

8 subparagraph— 

9 ‘‘(I) the term ‘additional appro10 priation for tax activities, including 

11 tax compliance to address the Federal 

12 tax gap’ means new and continuing 

13 investments in expanding and improv14 ing the effectiveness and efficiency of 

15 the overall tax enforcement and com16 pliance program of the Alcohol and 

17 Tobacco Tax and Trade Bureau and 

18 fully funding operational support ac19 tivities at the Alcohol and Tobacco 

20 Tax and Trade Bureau; and 

21 ‘‘(II) the term ‘new and con22 tinuing investments’ includes addi23 tional resources for implementing new 

24 authorities and for conducting addi25 tional examinations and audits. 


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1 ‘‘(iv) APPROPRIATION.—The first 

2 amount specified in subclauses (I) through 

3 (VI) of clause (ii) is the amount under the 

4 heading in an appropriations Act for the 

5 Alcohol and Tobacco Tax and Trade Bu6 reau that is specified to pay for the costs 

7 of tax activities, including tax compliance 

8 to address the Federal tax gap, and to pay 

9 for regulatory activities that protect the 

10 public. 

11 ‘‘(v) ADDITIONAL AMOUNT.—The 

12 amounts further specified in subclauses (I) 

13 through (VI) of clause (ii) are the amounts 

14 under the heading in an appropriations act 

15 for the Alcohol and Tobacco Tax and 

16 Trade Bureau for the amount of the addi17 tional appropriation for tax activities, in18 cluding tax compliance to address the Fed19 eral tax gap. 

20 ‘‘(F) ACTIVITIES THAT PROTECT THE PUB21 LIC CONDUCTED BY THE ALCOHOL AND TO22 BACCO TAX AND TRADE BUREAU.— 

23 ‘‘(i) IN GENERAL.—If a bill or joint 

24 resolution is enacted making appropria25 tions for a fiscal year to the Alcohol and 


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1 Tobacco Tax and Trade Bureau of not less 

2 than the first amount specified in sub3 clauses (I) through (VI) of subparagraph 

4 (E)(ii) for tax activities for that fiscal 

5 year, including tax compliance to address 

6 the Federal tax gap (taxes owed but not 

7 paid), and regulatory activities conducted 

8 by the Alcohol and Tobacco Tax and Trade 

9 Bureau, and making appropriations in the 

10 amount and for the purpose of the adjust11 ment in the second amount specified in 

12 subclauses (I) through (VI) of subpara13 graph (E)(ii), then the further additional 

14 adjustment for that fiscal year shall be the 

15 further additional appropriation provided 

16 in that Act for regulatory activities that 

17 protect the public for that fiscal year, but 

18 shall not exceed $5,000,000 in additional 

19 new budget authority. 

20 ‘‘(ii) DEFINITIONS.—As used in this 

21 subparagraph— 

22 ‘‘(I) the term ‘regulatory activi23 ties that protect the public’ means 

24 new budget authority for new and 

25 continuing investments in expanding 


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1 and improving programs at the Alco2 hol and Tobacco Tax and Trade Bu3 reau, such as regulating permitting, 

4 labeling, advertising, distribution and 

5 trade of alcohol and tobacco products; 

6 and 

7 ‘‘(II) the term ‘further additional 

8 new budget authority’ means the 

9 amount provided for a fiscal year in 

10 excess of the first amount specified in 

11 subclauses (I) through (VI) of sub12 paragraph (E)(ii) and the adjustment 

13 in the second amount specified in sub14 clauses (I) through (VI) of subpara15 graph (E)(ii), not to exceed 

16 $5,000,000.’’. 

17 SEC. 602. INCREASE INFORMATION SHARING TO ADMIN18 ISTER EXCISE TAXES. 

19 (a) IN GENERAL.—Section 6103(o) of the Internal 

20 Revenue Code of 1986 is amended by adding at the end 

21 the following new paragraph: 

22 ‘‘(3) TAXES IMPOSED BY SECTION 4481.—Re23 turns and return information with respect to taxes 

24 imposed by section 4481 shall be open to inspection 

25 by or disclosure to officers and employees of United 


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1 States Customs and Border Protection of the De2 partment of Homeland Security whose official duties 

3 require such inspection or disclosure for purposes of 

4 administering such section.’’. 

5 (b) CONFORMING AMENDMENTS.—Paragraph (4) of 

6 section 6103(p) of the Internal Revenue Code of 1986 is 

7 amended by striking ‘‘or (o)(1)(A)’’ each place it appears 

8 and inserting ‘‘, (o)(1)(A) or (o)(3)’’. 

Æ 


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