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FDA Stance Keeps Distillers From Using Hand Sanitizer Tax Break

Posted on Apr. 6, 2020

Lawmakers are pushing the Food and Drug Administration to back off a position that is keeping distilleries from being able to take advantage of a tax break created to ease the way for them to produce hand sanitizer.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) temporarily waives excise taxes on the alcohol that distillers typically have available for hand sanitizer production, but Congress made the waiver dependent on distillers following FDA guidance.

But because the FDA requires distillers to denature their alcohol, efforts to produce hand sanitizer have been restricted, lawmakers wrote in letters to FDA Commissioner Stephen Hahn.

Congress provided the excise tax waiver because “distillers are fulfilling a critical need in their communities and providing the hand sanitizer to health care professionals, first responders, and local and state governments,” seven senators wrote in an April 2 letter.

“Through the current guidance, the FDA is standing in the way of hundreds of thousands of gallons of hand sanitizer from being produced and given to those on the front lines battling this pandemic,” the senators said. The FDA should recognize undenatured alcohol as a permissible ingredient in the production of hand sanitizer to ensure that “distillers do not face a tax bill for filling a vital need in their communities.”

The CARES Act excise tax break applies to distilled spirits produced between January 1 and December 31. The federal excise tax on distilled spirits ranges from $2.70 per proof gallon to $13.50 per proof gallon, depending on production levels.

The denatured alcohol requirement is established under the FDA’s “Policy for Temporary Compounding of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency,” released March 27.

WHO Compliant

The congressional letters state that undenatured alcohol is food-grade alcohol that is compliant with the World Health Organization’s hand sanitizer formula and has the same effectiveness as denatured alcohol.

Like toilet paper, protective masks, and paper towels, hand sanitizer is in high demand as novel coronavirus diagnoses in the United States increase daily.

Nearly 600 distilleries in the United States are producing hand sanitizer to help deal with local shortages and aid sanitation practices, according to industry officials.

Senators represented on the letter to Hahn include Rand Paul, R-Ky.; Roy Blunt, R-Mo.; Gary C. Peters, D-Mich.; Marsha Blackburn, R-Tenn.; Ted Cruz, R-Texas; Kirsten E. Gillibrand, D-N.Y.; and Debbie Stabenow, D-Mich.

The 85 members of the House who signed a nearly identical March 27 letter to Hahn include Congressional Bourbon Caucus co-chairs John A. Yarmuth, D-Ky., and Andy Barr, R-Ky.

The FDA did not immediately respond to a request for comment.

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