The Distilled Spirits Council of the United States is working to address the need for congressional action, aiding distillers who currently have to pay full federal excise tax in the production of hand sanitizer to tackle COVID-19.
By working with Congress and the Trump Administration to ease tax regulations, DISCUS and members of its Technical Committee is playing a vital role of advocacy for distillers’ efforts during this time.
The Tax and Trade Bureau (TTB) has already eased regulations in order to allow distillers to create hand sanitizer. However, the TTB was unable to relinquish federal excise tax for the distillation of undenatured ethanol.
The TTB’s new guidance states: “Hand sanitizer products are not subject to Federal excise tax if made with denatured ethanol. However, if made with undenatured ethanol, Federal excise tax applies.”
Providing the distillery holds a beverage producers’ permit, it is now able to produce hand sanitizer and additionally the TTB allows the production without formula approval, providing the distillery follows the WHO formula. This formula includes grain neutral spirits, glycerine and hydrogen peroxide.
As part of the upcoming COVID-19 relief legislation, DISCUS has asked Congress to make this an emergency fix, allowing distillers to use the ethanol they have on hand, be that denatured or undenatured.
“We want to thank our regulator partners at the Tax and Trade Bureau for working with us to cut through the red tape so we can quickly help fill this need in our country,” said Chris Swonger, DISCUS CEO. “We appreciate Congress’ efforts to work with us and the Tax and Trade Bureau to make this important change regarding the federal excise tax and hand sanitizer production. The distilled spirits industry is already facing difficult times with tariffs and the shutdown of bars and restaurants. Distillers are members of the community and want to help, but forcing them to pay taxes on the hand sanitizer is just plain wrong.”