Destruction of Beer During COVID-19 FAQs

COV-B1: Because of COVID-19, I have unmerchantable beer in the marketplace. Can that taxpaid or tax-determined beer be destroyed without returning it to my brewery and can I be relieved of the tax on that beer?

Yes, beer in the marketplace may be destroyed off premises, without first returning it to the brewer’s premises, and the brewer may be relieved of or refunded the tax.

The tax paid by a brewer on beer produced in the United States and destroyed off premises may be refunded or credited to the brewer, without interest (see 26 U.S.C. 5056(a); 27 CFR 25.224).  If the tax has not been paid, the brewer may be relieved of liability for the tax (see 26 U.S.C. 5056(a); 27 CFR 25.224).

For information about how to be relieved of or refunded the tax on taxpaid beer that is transferred to a DSP, see COV-B6 below.

 


UPDATED COV-B2A: Do I have to notify TTB before I destroy taxpaid beer off brewery premises as described in COV-B1 above?

Current regulations require that brewers destroying taxpaid beer off brewery premises submit to TTB a notice of intent (NOI) containing specific information about the destruction at least 12 days prior to the destruction (see 27 CFR 25.222).

However, due to the business disruptions brewers are facing during COVID-19, TTB is waiving the requirement that brewers submit NOIs to TTB to destroy taxpaid beer in the marketplace, thus eliminating the 12-day waiting period under the regulation. Under this waiver, in lieu of submitting the NOI, brewers must maintain records showing the information required to be submitted on the NOI (see 27 CFR 25.222(c)), including a serial number for each destruction that is then identified by reference on any claims or adjustments, and must include the information required on NOIs and proof of destruction when submitting a claim to TTB for refund of tax (see COV-B6 below).

We are providing this waiver through July 1, 2020*, under our authority at 27 CFR 25.52(b), and we may consider extending it as needed to address COVID-19-related circumstances.

*UPDATED as of June 23, 2020: This waiver was initially provided through July 1, 2020. However, due to the ongoing and significant business disruptions due to COVID-19, TTB is extending the waiver through September 1, 2020.

 


COV-B3: Because of COVID-19, I have beer on hand at my brewery premises that I am not going to be able to sell. Can beer on my premises be transferred to a distilled spirits plant (DSP) for use in the production of hand sanitizer without payment of tax?

Yes, under existing law, brewers may transfer beer without payment of tax from the brewery to a DSP  for use as distilling material (see IRC provision 26 U.S.C. 5053(f)), which DSPs may subsequently use in the production of hand sanitizer.  If applicable, such transfers also may be made by pipeline from the brewery to a DSP under current regulations (see 27 CFR 25.201).

Brewers transferring beer to a DSP must record the removal in their daily records, report it on their Brewer’s Report of Operations, and maintain supporting documents, such as a record of transfer to the DSP, under the requirements of Subpart U—Records and Reports

 


COV-B4: Because of COVID-19, some of my beer in the marketplace has reached or exceeded its freshness date. Can that taxpaid or tax-determined beer be transferred to a DSP for use in the production of hand sanitizer and can I be relieved of the tax for beer transferred to a DSP?

Yes, it is possible for brewers to transfer beer in the marketplace to a DSP and be relieved of or refunded tax.

Beer that is received at a DSP for use as distilling material is considered, for purposes of the TTB regulatory requirements, to be beer destroyed off brewery premises.  The tax paid by a brewer on beer produced in the United States and received at a distilled spirits plant may be refunded or credited to the brewer, without interest (see 26 U.S.C. 5056(a) and (c); 27 CFR 25.224).  If the tax has not been paid, the brewer may be relieved of liability for the tax (see 26 U.S.C. 5056(a) and (c); 27 CFR 25.224).

For information about how to be relieved of or refunded the tax on taxpaid beer that is transferred to a DSP, see COV-B6 below.

 


UPDATED COV-B5A: Do I have to notify TTB before I destroy taxpaid beer off brewery premises as described in COV-B4 above?

In cases where beer is considered destroyed off brewery premises because it is used by a DSP as distilling material, TTB is waiving the requirement under 27 CFR 25.222 to submit to TTB an NOI under the same terms as described in COV-B2 above.  Specifically, TTB is waiving the requirement that brewers submit NOIs to TTB to destroy taxpaid beer in the marketplace, which also alleviates the 12-day waiting period described in this regulation.  Under this waiver, in lieu of submitting the NOI, brewers must maintain records showing the information typically required to be submitted on the NOI (see 27 CFR 25.222(c)), including a serial number for each destruction that is then identified by reference on any claims or adjustments.

We are providing this waiver through July 1, 2020*, under our authority at 27 CFR 25.52(b), and we may consider extending it as needed to address COVID-19-related circumstances. 

*UPDATED as of June 23, 2020: This waiver was initially provided through July 1, 2020. However, due to the ongoing and significant business disruptions due to COVID-19, TTB is extending the waiver through September 1, 2020.

 


COV-B6: What must I do to be relieved of or refunded the tax on taxpaid beer that is destroyed off brewery premises?

Under current regulations (see Subpart T of 27 CFR part 25), brewers who wish to recoup the tax they paid on beer that is destroyed may file a claim for refund.  Brewers must submit to TTB a completed claim on TTB Form 5620.8 with all of the information and supporting documentation required under 27 CFR 25.283(a).  If the brewer does not submit the NOI, TTB is requiring under 27 CFR 25.283(d) that brewers submit the information required on NOIs under 27 CFR 25.222 and proof of destruction, through commercial records or statements under penalties of perjury.

If filing a claim, we strongly encourage brewers to send claims electronically by submitting a completed claim on TTB Form 5620.8 and all supporting documentation through TTB’s online claims submission process.  Due to COVID-19, to ensure the safety and well-being of our employees, and in accordance with federal, state, and local guidelines, we will be very limited in our ability to receive and process paper submissions sent to our office locations, which could result in significant delays in processing claims submitted by mail.

Under normal circumstances, claims must be filed within 6 months after the date of the destruction. Due to COVID-19, we have postponed certain due dates. To find out whether the due date for filing a claim on beer you destroyed has been postponed, please see TTB Industry Circular 2020-2, Tax Payment and Other Filing Due Dates Postponed for Industry Members Affected by COVID-19.

Alternatively, in lieu of filing a claim for refund of tax, a brewer may instead make an adjustment (without interest) to the next excise tax return on TTB Form 5000.24 under current regulations (see 27 CFR 25.224(b) and 25.284).

For questions about the trade practice implications of returns of beer from the marketplace, see TTB G 2020-2, Returns of Alcohol Beverage Products Purchased for Events Cancelled Due to COVID-19 Emergency.

 


COV-B7: I am a brewer that produced and paid taxes on beer that is in kegs in the marketplace, and I would like to destroy that beer without returning it to my brewery. To save costs, can the beer be removed from the kegs and transferred to a DSP or otherwise destroyed by a wholesaler on behalf of my brewery?

Yes, TTB regulations do not prohibit a brewer from having a wholesaler destroy beer on a brewer’s behalf by, for example, removing beer from kegs and transferring that beer to a DSP for destruction.  Note that brewers must support any claim for refund or adjustment of tax for all beer destroyed, including beer destroyed on its behalf.

Brewers must maintain records showing the same information required to be submitted on the notice of intent to destroy (see 27 CFR 25.222(c)), including a serial number for each destruction that is then identified by reference on any claims or adjustments.  Claims or adjustments on tax returns must reference the serial number for the destruction subject to the claim or adjustment, as the case may be (see COV-B6).

In cases where wholesalers arrange for the destruction of beer on the brewer’s behalf, wholesaler records, such as commercial records, statements under penalties of perjury, and other evidence of destruction that the wholesaler maintains, are adequate records of destruction.