The Internal Revenue Code (IRC), at 26 U.S.C. 5041, defines and imposes six Federal excise tax rates on wine, which vary by the wineâs alcohol and carbon dioxide content. Wines with no more than 0.392 grams of carbon dioxide per 100 milliliters are taxed as still wine at $1.07, $1.57, or $3.15 per gallon, depending on their alcohol content, while wines with more than 0.392 grams of carbon dioxide per 100 milliliters are taxed as effervescent wine at $3.30 per gallon if artificially carbonated or $3.40 per gallon if naturally carbonated. However, under those IRC provisions, certain apple- and pear-based wines are subject to the âhard ciderâ tax rate of $0.226 per gallon if the product contains no more than 0.64 grams of carbon dioxide per 100 milliliters of wine and does not exceed 8.5 percent alcohol by volume. Given the significant difference in those excise tax rates which, in part, depend on the level of a wine's effervescence, the TTB regulations at 27 CFR 24.302 require proprietors who produce or receive effervescent hard cider to record the amount of carbon dioxide in the product. This recordkeeping requirement is necessary to protect the revenue as it allows TTB to verify during field audits a respondent's compliance with the statutory definition of wine eligible for the hard cider tax rate.
US Code:
26 USC 5041
Name of Law: Internal Revenue Code
There are no program changes associated with this information collection. As for adjustments, due to changes in agency estimates resulting from continued growth in the number of hard cider producers in the United States, TTB is increasing the estimated number of annual respondents to this information collection, from 548 to 820. In turn, this increases this collectionâs estimated number of annual responses, from 13,700 to 20,500, and the burden hours, from 58,225 to 87,125. In addition, TTB is now accounting for, and is increasing due to changes in agency estimates, the estimated annualized costs to respondents associated with this information collection. As such, TTB is increasing its annualized respondent cost estimate from $1,716,740 to $2,242,500.
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
1513-0139 Supporting Statement (08-2020v2).docx
Record of Carbon Dioxide Measurement in Effervescent Products Taxed as Hard Cider