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Excise tax relief, distilled spirits used to produce hand sanitizers (responding to COVID-19)

Excise tax relief, distilled spirits (COVID-19)

The U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB) on March 18, 2020, issued a release announcing that it was waiving certain excise tax provisions with regard to distilled spirits that are used in the production of hand sanitizers.

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TTB on March 26, 2020, updated the guidance. The updated TTB release announces certain exemptions and authorizations are available for existing distilled spirits permittees that want to produce ethanol-based hand sanitizers.

  • Existing beverage distilled spirits plants (DSP) and alcohol fuel plants (AFP) can immediately commence production of hand sanitizer without first having to obtain authorization or formula approval.
  • DSPs and AFPs can supply distilled spirits (ethanol) for use in the manufacture of hand sanitizer to other permittees without first having to obtain authorization.
  • Industrial alcohol users may procure increased amounts of denatured ethanol and can use denatured ethanol to manufacture hand sanitizer without first obtaining formula approval.
  • The hand sanitizer produced must meet certain World Health Organization standards and other standards listed in the TTB release.

The TTB release notes that hand sanitizers made with denatured ethanol are not subject to federal excise tax. However, if the hand sanitizer is made with undenatured ethanol, federal excise tax applies.

The provisions apply through June 30, 2020.


For more information, contact a tax professional with KPMG’s Excise Tax Practice group:

Taylor Cortright | +1 (202) 533 6188 | tcortright@kpmg.com

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