The California Board of Equalization is requiring brewers who sell beer in the state to file a form listing all malt beverages sold in the state. The form requires brewers to indicate whether each brand does or does not contain 0.5% added alcohol. Those beers above that threshold will be reclassified as a distilled spirit for tax purposes.
Currently, beer is taxed at 20 cents per gallon in California. With the change, any product that includes 0.5% added alcohol from flavorings or other additives will be taxed at $3.30 per gallon, an increase of 1,650 percent.
The BOE ruling takes effect on Oct. 1st.
Diageo-Guinness USA, a producer of flavored malt beverages said it and the Flavored Malt Beverage Coalition have filed suit against the BOE challenging the regulations. Diageo said the BOE does not have the authority to classify alcohol beverages for taxation purposes, adding that malt-based flavored beer is not a distilled spirit and has been taxed as beer for decades.
Brewers can download the forms at http://www.boe.ca.gov/sptaxprog/reports/boe269lbp.xls