On March 23, 2018, TTB published additional Tax Act guidance on its website. Three new clarifications address the interaction of the new Tax Act rates/credits with the wine and flavor credits available under 26 U.S.C. § 5010. The clarifications are:
TTB re-confirms that the 5010 credit applies to spirits subject to the Tax Act’s reduced rates, but the 5010 credit cannot reduce the effective rate of tax on any spirit to below zero.
TTB indicates that the effective rate of tax on products receiving 5010 flavor credit will vary, depending on the applicable Tax Act rate applied to the finished product.
The wine base rates, before any reduction through Tax Act credit allowances, are to be used when calculating the wine content credit applied to a spirit under Section 5010.