As we head towards the end of the year in the craft brewing world, there is still important things happening that will have a direct impact on your brewery and its success. One of those things that needs to get wrapped up here shortly is the tax extension of the excise tax cuts. In the Tax Cuts and Jobs Act, federal excise taxes on a barrel of beer was reduced for craft breweries from $7 per barrel to $3.50 per barrel. However, that tax cut is due to expire at the end of this year, which means if Congress does not extend it, then the tax goes back to $7 per barrel for the 2020 tax year.
Very early this morning (or late last night if you prefer) Congressional leaders in the House and Senate agreed on a bipartisan tax extenders deal as part of the larger federal spending bill being approved. This bill includes an extension of the federal excise tax break through 2020, although the deal does not currently make that extension permanent, which means this time next year we will be playing the waiting game to see if this tax break gets extended or is made permanent.
For our Illinois breweries, minimum wage is set to increase by $1 for 2020 and is the first of many scheduled increases to increase the Illinois minimum wage over the next few years. However, there is a tax break involved here that is hidden on your payroll tax returns. The IL minimum wage credit provides a 25% tax credit on the $1 increase you pay to minimum wage earners in your brewery if and only if you pay employees at minimum wage and if you paid them less than the 2020 minimum wage in 2019. There are a variety of caveats in this credit and this credit must be claimed on your IL-941 payroll tax form. Make sure to check in with your payroll tax provider regarding this credit. And if we take care of payroll for you, you are already setup to receive this!
Unfiltered is Coming!
Our annual Unfiltered conference is coming up in January and now is the time to register for this free conference. We are excited that this conference is now being sponsored by our friends at Xero. For more information about this conference, check out the video above. To register visit our conference website at lancecpa.com/bb20
Further information on the federal excise tax extension
Congressional leaders struck a tax-policy deal, capping a long weekend of negotiations with an agreement that will extend lapsed and expiring tax breaks but won’t be as expansive as many lawmakers had hoped.
Late last night leaders of the House Ways and Means and Senate Finance Committees came to an agreement on a tax extender package that included a one year extension of the recalibrated federal excise tax (FET) rates for breweries and the ability to transfer beer between bonded facilities.
But here’s where narratives can diverge, because while the purchase and sale of Ballast Point is an objective failure from a dollars-and-cents perspective, the mistake was at least made by a company that could afford to mess up—even if the thought is a ghastly one made possible by a blend of shrewd business moves and zero fucks to give.
At Lance CPA Group, we partner with craft brewery owners who embrace unconventional risk and strive for creativity. Those who lend themselves to change, remain transparent and without pretense are the breweries that thrive.
For more information on how we work with breweries, visit our website here.
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