President Obama’s budget for FY 2010, 2011 and 2012 proposes to have Department of the Treasury and the Alcohol and Tobacco Tax and Trade Bureau (TTB) collect annual fees from alcohol beverage suppliers, wholesalers and retailers. This new fee proposal by the Administration will fund the vast majority of the TTB budget. The annual fee proposal is essentially a re-imposition of the Special Occupational Tax (SOT) regime that Congress repealed in 2005.
In repealing the old SOT, Congress sought to bring tax relief to small businesses. The proposed fee structure is almost exactly the same as the tax structure before repeal, except they raise the “fee” on retailers from $250 to $300. The President’s Budget seeks to reinstate a tax that was not only anti-small business but was also difficult for the government to administer and collect.
In the past the SOT went to the general treasury. Under this proposal, the fee will be appropriated to the TTB directly to fund part of its budget. The Government Accountability Office has examined the efficacy of collecting the SOT several times and found it to be flawed.
In the past the SOT fell especially hard on small retail stores. Whether it was a seasonal restaurant, a small community club, convenience or grocery store, campground or florist that delivers wine with flowers – no one was spared from the tax. More than 90% of all SOT revenue came from retailers.
The user fee is unfair and inequitable for all businesses. In fact, a chain of four neighborhood food stores would pay more in fees than the nation’s largest single site brewery or distillery plant - $1,200 compared to $1,000. In addition, some larger chains would now pay as much as a half-a-million dollars annually for the SOT – money that could be better-spent hiring employees.
NACS is opposed to reinstating the SOT even disguised as a user fee.
The President’s budget for FY 2012 currently provides for TTB to collect user fees to fund its proposed budget of $100 million.
Congress has rejected President Obama’s request for the TTB to collect a user fee the last three Congresses.
NACS has joined a coalition, which has sent a letter to the Chairman and Ranking Member of the Appropriations’ Subcommittee on Financial Services and General Government asking them to oppose the enactment of this fee.