Manufacturers of Non-beverage Products ("MNBPs") may file a claim for TTB drawback on the federal excise tax paid on distilled spirits used in the manufacturing of medicine, medicinal preparations, food products, flavor/flavor extracts, or perfume. The drawback rate is the applicable federal excise tax rate, minus $1.00. For distilled spirits, the excise tax rate is either $13.50, $13.34, or $2.70 per proof gallon, depending on whether the supplier of the distilled spirits qualifies for a reduced excise tax rate.
TTB Drawback claims are governed by 26 U.S.C. 5111-5114, and 27 C.F.R. section 17. According to these provisions, MNBP's have 6 months to file a claim from the time the distilled spirits were used in the manufacturing of the product. The code provisions make clear, however, that noncompliance with the 6-month filing period will not bar a manufacturer from claiming drawback.
What is the Statute of Limitations to File TTB Drawback?
Importantly, and what many in the industry do not know, is that MNBP's may claim drawback for up to 6 years after the time the right first accrued, subject to a penalty; the penalty is either $1,000.00, or the amount of the claim, whichever is less. For many MNBP's, $1,000.00 is far less than the amount of federal excise tax eligible for drawback, and therefore, some MNBP's figuratively "leave money on the table" by not filing otherwise eligible claims within the allotted 6 year statute of limitations.
In other words, if your business used alcohol to manufacture non-beverage products over the past 6 years, you may still be eligible for federal excise tax drawback.
If you have questions regarding MNBP drawback claim eligibility, and are interested in a consultation on potential claim filing, please contact our firm for a claim evaluation.