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Distilleries fight potential federal tax increase

Some fear having to close
Posted at 7:14 PM, Dec 03, 2020
and last updated 2020-12-03 19:20:10-05

INDIANAPOLIS — Some distilleries say they are at risk of shutting down if Congress does not extend existing tax breaks.

Travis Barnes says they’ve had to get innovative at Hotel Tango Distillery in Fountain Square to keep the doors open and continue serving craft cocktails during a pandemic. “We’ve had to re-organize our seating, we’ve had to add seating outside,” the owner of the craft distillery says. “We came up with new cocktails. New canned cocktails for folks to carry around options. And just really trying to shift and pivot with all the new and updated regulations.”

On top of this — is the fear of a 400% tax increase next year if Congress doesn’t extend the Craft Beverage Modernization and Tax Reform Act by December 31st. “So it would jump from around $250 up to $1350 overnight,” said Barnes.

Last year, Congress passed a one-year extension of the federal excise tax to allow businesses to expand.
“That would be hundreds of thousands of dollars in additional taxes that we would pay over the next year or years,” said Barnes. “So that’s job creation, equipment and our ability of growth that would really be impacted by that additional taxation.”

Barnes says this disproportionately impacts craft distilling because of the threshold of taxation. “At 100,000 gallons is really where the first break would occur. So Jim Beam and Jack Daniels make that in the first two days of the year, where us, we would not even come close to that for next year,” he said. “So that’s a big difference on who it really impacts: the small guys, not the big guys.”

He is thanking the community who’s supported them already and urging people to contact our Indiana senators to extend the excise tax. “If it keeps the taxes low, you’ll see more craft spirits growing in Indiana.”

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