INCREASE IN EXCISE TAXES ON DISTILLED SPIRITS. WINE, AND BEER.

SEC. 11201. INCREASE IN EXCISE TAXES ON DISTILLED SPIRITS. WINE, AND BEER. (a) Distilled Spirits.— (1) In general.— Paragraphs (1) and (3) of section 5001(a) (relating to rate of tax on distilled spirits) are each amended by striking “$12.50” and inserting “$13.50”. (2) Technical amendment.— Paragraphs (1) and (2) of section 5010(a) (relating to credit for wine content and for flavors content) are each amended by striking “$12.50” and inserting “$13.50”. (b) Wine.— (1) Tax increases.— (A) Wines containing not more than 14 percent alcohol.— Paragraph (1) of section 5041(b) (relating to rates of tax on wines) is amended by striking “17 cents” and inserting “$1.07”. (B) Wines containing more than 14 (but not more than 21) percent alcohol.— Paragraph (2) of section 104 STAT. 1388–4165041(b) is amended by striking “67 cents” and inserting “$1.57”. (C) Wines containing more than 21 (but not more than 24) percent alcohol.— Paragraph (3) of section 5041(b) is amended by striking “$2.25” and inserting “$3.15”. (D) Artificially carbonated wines.— Paragraph (5) of section 5041(b) is amended by striking “$2.40” and inserting “$3.30”. (2) Credit for small domestic producers.— Section 5041 is amended by redesignating subsections (c), (d), and (e) as subsections (d), (e), and (f), respectively, and by inserting after subsection (b) the following new subsection: “(c) Credit for Small Domestic Producers.— “(1) Allowance of credit.— Except as provided in paragraph (2), in the case of a person who produces not more than 250,000 wine gallons of wine during the calendar year, there shall be allowed as a credit against any tax imposed by this title (other than chapters 2, 21, and 22) of 90 cents per wine gallon on the 1st 100,000 wine gallons of wine (other than wine described in subsection (b)(4)) which are removed during such year for consumption or sale and which have been produced at qualified facilities in the United States. “(2) Reduction in credit.— The credit allowable by paragraph (1) shall be reduced (but not below zero) by 1 percent for each 1,000 wine gallons of wine produced in excess of 150,000 wine gallons of wine during the calendar year. “(3) Time for determining and allowing credit.— The credit allowable by paragraph (1)— “(A) shall be determined at the same time the tax is determined under subsection (a) of this section, and “(B) shall be allowable at the time any tax described in paragraph (1) is payable as if the credit allowable by this subsection constituted a reduction in the rate of such tax. “(4) Controlled groups.— Rules similar to rules of section 5051(a)(2)(B) shall apply for purposes of this subsection. “(5) Denial of deduction.— Any deduction under subtitle A with respect to any tax against which a credit is allowed under this subsection shall only be for the amount of such tax as reduced by such credit. “(6) Regulations.— The Secretary may prescribe such regulations as may be necessary to prevent the credit provided in this subsection from benefiting any person who produces more than 250,000 wine gallons of wine during a calendar year and to assure proper reduction of such credit for persons producing more than 150,000 wine gallons of wine during a calendar year. (3) Conforming amendment.— Paragraph (3) of section 5061(b) is amended to read as follows: “(3) section 5041(e),”. (c) Beer.— (1) In general.— Paragraph (1) of section 5051(a) (relating to imposition and rate of tax on beer) is amended by striking “$9” and inserting “$18”. (2) Regulations.— Paragraph (2) of section 5051(a) is amended by adding at the end thereof the following new subparagraph: “(C) Regulations.— The Secretary may prescribe such regulations as may be necessary to prevent the reduced 104 STAT. 1388–417rates provided in this paragraph from benefiting any person who produces more than 2,000,000 barrels of beer during a calendar year.” (d) Effective Date.— The amendments made by this section shall take effect on January 1, 1991. (e) Floor Stocks Taxes.— (1) Imposition of tax.— (A) In general.— In the case of any tax-increased article— (i) on which tax was determined under part I of subchapter A of chapter 51 of the Internal Revenue Code of 1986 or section 7652 of such Code before January 1, 1991, and (ii) which is held on such date for sale by any person, there shall be imposed a tax at the applicable rate on each such article. (B) Applicable rate.— For purposes of subparagraph (A), the applicable rate is— (i) $1 per proof gallon in the case of distilled spirits, (ii) $0.90 per wine gallon in the case of wine described in paragraph (1), (2), (3), or (5) of section 5041(b) of such Code, and (iii) $9 per barrel in the case of beer. In the case of a fraction of a gallon or barrel, the tax imposed by subparagraph (A) shall be the same fraction as the amount of such tax imposed on a whole gallon or barrel. (C) Tax-increased article.— For purposes of this subsection, the term “tax-increased article” means distilled spirits, wine described in paragraph (1), (2), (3), or (5) of section 5041(b) of such Code, and beer. (2) Exception for small domestic producers.— (A) In the case of wine held by the producer thereof on January 1, 1991, if a credit would have been allowable under section 5041(c) of such Code (as added by this section) on such wine had the amendments made by subsection (b) applied to all wine removed during 1990 and had the wine so held been removed for consumption on December 31, 1990, the tax imposed by paragraph (1) on such wine shall be reduced by the credit which would have been so allowable. (B) In the case of beer held by the producer thereof on January 1, 1991, if the rate of the tax imposed by section 5051 of such Code would have been determined under subsection (a)(2) thereof had the beer so held been removed for consumption on December 31, 1990, the tax imposed by paragraph (1) on such beer shall not apply. (C) For purposes of this paragraph, an article shall not be treated as held by the producer if title thereto had at any time been transferred to any other person. (3) Exception for certain small wholesale or retail dealers.— No tax shall be imposed by paragraph (1) on tax-increased articles held on January 1, 1991, by any dealer if— (A) the aggregate liquid volume of tax-increased articles held by such dealer on such date does not exceed 500 wine gallons, and (B) such dealer submits to the Secretary (at the time and in the manner required by the Secretary) such information 104 STAT. 1388–418as the Secretary shall require for purposes of this paragraph. (4) Credit against tax.— Each dealer shall be allowed as a credit against the taxes imposed by paragraph (1) an amount equal to— (A) $240 to the extent such taxes are attributable to distilled spirits, (B) $270 to the extent such taxes are attributable to wine, and (C) $87 to the extent such taxes are attributable to beer. Such credit shall not exceed the amount of taxes imposed by paragraph (1) with respect to distilled spirits, wine, or beer, as the case may be, for which the dealer is liable. (5) Liability for tax and method of payment.— (A) Liability for tax.— A person holding any tax-in-creased article on January 1, 1991, to which the tax imposed by paragraph (1) applies shall be liable for such tax. (B) Method of payment.— The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe by regulations. (C) Time for payment.— The tax imposed by paragraph (1) shall be paid on or before June 30, 1991. (6) Controlled groups.— (A) Corporations.— In the case of a controlled group— (i) the 500 wine gallon amount specified in paragraph (3), and (ii) the $240, $270, and $87 amounts specified in paragraph (4), shall be apportioned among the dealers who are component members of such group in such manner as the Secretary shall by regulations prescribe. For purposes of the preceding sentence, the term “controlled group” has the meaning given to such term by subsection (a) of section 1563 of such Code; except that for such purposes the phrase “more than 50 percent” shall be substituted for the phrase “at least 80 percent” each place it appears in such subsection. (B) Nonincorporated dealers under common control.— Under regulations prescribed by the Secretary, principles similar to the principles of subparagraph (A) shall apply to a group of dealers under common control where 1 or more of such dealers is not a corporation. (7) Other laws applicable.— (A) In general.— All provisions of law, including penalties, applicable to the comparable excise tax with respect to any tax-increased article shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply to the floor stocks taxes imposed by paragraph (1) to the same extent as if such taxes were imposed by the comparable excise tax. (B) Comparable excise tax.— For purposes of subparagraph (A), the term “comparable excise tax” means— (i) the tax imposed by section 5001 of such Code in the case of distilled spirits, (ii) the tax imposed by section 5041 of such Code in the case of wine, and (iii) the tax imposed by section 5051 of such Code in the case of beer. 104 STAT. 1388–419 (8) Definitions.— For purposes of this subsection— (A) In general.— Terms used in this subsection which are also used in subchapter A of chapter 51 of such Code shall have the respective meanings such terms have in such part. (B) Person.— The term “person” includes any State or political subdivision thereof, or any agency or instrumentality of a State or political subdivision thereof (C) Secretary.— The term “Secretary” means the Secretary of the Treasury or his delegate. (9) Treatment of imported perfumes containing distilled spirits.— For purposes of this subsection, any article described in section 5001(a)(3) of such Code shall be treated as distilled spirits; except that the tax imposed by paragraph (1) shall be imposed on a wine gallon basis in lieu of a proof gallon basis. To the extent provided by regulations prescribed by the Secretary, the preceding sentence shall not apply to any article held on January 1, 1991, on the premises of a retail establishment.