Record of Carbon Dioxide Measurement in Effervescent Products Taxed as Hard Cider

The Internal Revenue Code (IRC), at 26 U.S.C. 5041, defines and imposes six Federal excise tax rates on wine, which vary by the wine’s alcohol and carbon dioxide content. Wines with no more than 0.392 grams of carbon dioxide per 100 milliliters are taxed as still wine at $1.07, $1.57, or $3.15 per gallon, depending on their alcohol content, while wines with more than 0.392 grams of carbon dioxide per 100 milliliters are taxed as effervescent wine at $3.30 per gallon if artificially carbonated or $3.40 per gallon if naturally carbonated. However, under those IRC provisions, certain apple- and pear-based wines are subject to the “hard cider” tax rate of $0.226 per gallon if the product contains no more than 0.64 grams of carbon dioxide per 100 milliliters of wine and does not exceed 8.5 percent alcohol by volume. Given the significant difference in those excise tax rates which, in part, depend on the level of a wine's effervescence, the TTB regulations at 27 CFR 24.302 require proprietors who produce or receive effervescent hard cider to record the amount of carbon dioxide in the product. This recordkeeping requirement is necessary to protect the revenue as it allows TTB to verify during field audits a respondent's compliance with the statutory definition of wine eligible for the hard cider tax rate.

The latest form for Record of Carbon Dioxide Measurement in Effervescent Products Taxed as Hard Cider expires 2023-10-31 and can be found here.