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Schumer Bill – The CIDER Act – Included in Must-Pass Extenders Package Would Provide Revised Definition of Hard Cider to Ensure All Products Can Be Labeled & Taxed Like Hard Cider, Not Higher Rate For Wine – Allows Producers that Often Suffer from Frost & Bad Weather to Add New Stable Source of Income

NY Has Hundreds of Apple Growers & Increasing Number of Hard Cider Producers – Legislation Would Boost Business for Existing Producers, Help New Growers Add Highly Popular Hard Cider to Product Line, Improve Ability to Compete

Schumer: NY Should Be At The Core of Hard Cider Production 

U.S. Senator Charles E. Schumer announced that a number of vital tax benefits for New Yorkers were included in the Protecting Americans From Tax Hikes Act of 2015, known as the tax extenders package. This must-pass legislation includes the CIDER Act, legislation which he initially introduced to lower the excise tax imposed on hard cider and help boost New York’s growing hard cider industry. Under current federal law, the outdated definition of hard cider only allows for hard cider’s alcohol content to reach up to seven percent alcohol per volume before it is taxed at the higher rate of wine, and only a certain level of carbonation before it is taxed at the even higher rate of sparkling wine. With the passage of the CIDER Act, the definition of hard apple cider and pear cider would be changed in the Internal Revenue Code. This would increase the allowed alcohol by volume, and thus allow more hard cider products to be labeled and taxed like hard cider instead of the costlier tax structure for wine. Schumer urged his Senate colleagues to pass the CIDER Act in order to boost the sales for New York’s increasing number of hard apple cider producers and allow the hundreds of apple growers in the state to expand their business and add this popular craft beverage to their product line.

“The inclusion of the CIDER Act in this legislation means everyone from our New York apple growers to our hard cider producers would benefit from the fair taxation of hard cider. New York is the second largest apple producing state in the country, and there's no doubt it should be at the core of the hard cider industry. Under this legislation, apples that would otherwise be sold at a loss or thrown away, are now ripe for the cider press. By modernizing the definition of hard cider, our hard cider industry would pay less in taxes and be able to expand and compete,” said Schumer. “I am urging my colleagues on both sides of the aisle and in both chambers of Congress to vote for this bill so we can send this to the President’s desk. I have not stopped fighting to pass the CIDER Act, which would increase New York growers’ and producers’ ability to compete overseas and expand their business.”

In February 2015, Schumer announced the Senate Finance committee passed the CIDER Act; bipartisan legislation he first introduced in 2013. Now, the CIDER Act is included in must-pass tax extenders legislation. Schumer explained that the alcohol content of New York’s hard cider fluctuates greatly due to sugar content, and current law often forces it to be taxed at a higher rate, preventing it from being labeled as hard cider. Under current federal law, the outdated definition of hard apple and pear cider only allows for up to 7 percent alcohol by volume before it is taxed at the higher alcohol per volume rate of wine, and only a certain level of carbonation before it is subject to the champagne tax. Schumer said that many of New York’s hard cider producers are small craft hard cider operators, and because they rely on natural products, there is very little predictability and control over the precise alcohol content of their product. In addition, some consumers of hard apple cider expect a high level of carbonation as a substitute for beer, and current federal tax law doesn’t permit the desired amount without classifying the product as champagne. In both cases, hard cider often falls into a different beverage categories, which makes ciders subject to higher alcohol excise taxes, and complicates labeling issues.

By providing this revised definition for hard apple and pear cider, increasing the alcohol by volume from 7 percent to 8.5 percent and carbonation level allowed, producers and growers could encompass significantly more hard cider products. This would allow their products to be labeled and taxed like hard cider, rather than wine. In 2013, Schumer first argued this would allow the over 650 apple growers and 20 existing hard apple cider producers at the time to expand their business.

Producing hard cider offers major benefits to apple orchards, whether they choose to increase production and add additional acres of “hard cider trees,” or if farmers simply use existing products to diversify their business. Most importantly, apple and other fruit growers who have suffered from frosts and bad weather in recent years have benefited from adding hard cider into their business model, as it is not nearly as susceptible to these unpredictable occurrences. Some producers grow specific varieties of apples to produce hard cider, while other producers can use apples from their crops that have been damaged by storms. Hard cider can also be made from apples that are high quality, but that are not as aesthetically pleasing to sell on a farmer stand, and that would otherwise be sold at a loss or thrown away.

In addition, hard cider is a value-added product, and can reign in significant value for producers than simply selling the same apples. Hard cider is sold around the same price every year; therefore it gives producers a stable source of income when apple crops suffer due to weather and other unforeseen factors. New York apple producers are increasingly interested in producing smaller, artisanal batches of hard cider, but cite the cost and difficulty to comply with the IRC definition as significant impediments to expanding their businesses. Schumer said the federal definition of hard cider under the IRC is restrictive to both current producers as well as those hundreds of growers that would like to enter production of this craft beverage.

New York is the second largest apple producer nationwide, harvesting a total of 29.5 million bushels annually from over 650 farms and 41,000 acres across the state. In recent years, thanks to the growing popularity of hard cider, many apple producers have turned to producing this craft beverage to keep apple orchards profitable.