A few updates to share. Please continue to review our COVID-19 Resources page for a (hopefully) concise summary from us. This page also includes an archive of these email updates.
Based on our research and confirmation from the ABC chief counsel, we can provide the following guidelines regarding keg buy-backs:
- Manufacturers cannot be compelled to buy-back draft beer from wholesalers against their wish.
- However, manufacturers may voluntarily buy-back kegs due to COVID-19, provided that both the manufacturer and wholesaler are in agreement as to the conditions and terms of the buy-back, including any discounted price. Proper records of this action must be kept.
- If a keg is returned to the manufacturer because of COVID-19, the beer may re-enter the market. If it is returned because it is out-of-code, it may not re-enter the market. You should be very wary of the quality of any returned products.
Please note that buy-backs should be heavily scrutinized to ensure that the manufacturer and wholesaler are not engaged in an illegal consignment sale. Buy-backs are usually only allowed in narrow circumstances, and “slow-moving product” is not normally a valid reason.
You should be aware that large breweries such as Diageo, Anheuser-Busch In-Bev and Constellation are accepting buy-backs at a discount only. AB-Inbev, for example, is offering 50% reimbursement for untapped, out-of-code draft beer through July 1.
ABC Excise Taxes
We have continued to ask the ABC to confirm that they will not charge penalties or interest on late payment of excise taxes. Late last week, we received the following statement from the Director of the ABC’s Tax and Trade Practices Division. The Administration and Legal Division were copied in the email. While not as strong as I would prefer, I think this should provide some confidence that you can defer payment of ABC excise taxes for the time being.
ABC is keenly aware of the difficulties and economic impact that COVID-19 has had on Alabama’s craft beer, wine and spirit manufacturers. We are also sensitive to the other financial obligations that manufacturers must fulfill. As are result, ABC does not anticipate that penalties or interest will commence for late excise tax remittances in the foreseeable future.
You should continue to file your monthly reports. Also note that the ABC does not normally administer the $0.1625 per 4-oz uniform local excise tax. You should consult with your local collection agency on that.
Under the leadership of the Brewers Association and, in many cases, other trade associations in the alcoholic beverage space, we are also advocating for several issues at the federal level.
Chief among these, I believe, is a beer tax credit for “un-merchantable beer,” or draft beer that went out-of-code due to the government-mandated COVID-19 response. This is a credit that would be applied against all federal taxes, not just income taxes. We do not see these as ordinary business losses; we believe these are extraordinary business losses due to this unique situation.
The creation of this tax credit is not a guarantee, but many organizations are lobbying Congress for this relief.