HHS Makes It Official: Distillers Hand Sanitzer Won’t Be Taxed

Department of Health & Human Services (HHS) submitted a Notice to the Federal Register announcing that those who entered the market to supply hand sanitizer during the COVID-19 public health emergency are not subject to the OTC Drug Monograph Facility Fee.

The HHS chief of staff had announced the reversal of a Food & Drug Administration rule on Dec. 31.  The latest HHS action simply makes it official.

In the latest Notice, HHS notes that the distillers are not in the drug manufacturing business, and therefore, given “tjhe extraordinary circumstances presented by the Covid-19 pandemic, the Department declines to identify these as OTC drug manufacturing facilities.

“Second, imposing facility fees on these entities is inconsistent with Congress’ stated intent elsewhere in the CARES Act. Section 2308 of the Act provides a temporary exemption from excise taxes for distilled spirits ‘use[d] in or contained in hand sanitizer produced and distributed in a manner consistent with any guidance issued by the Food and Drug Administration that is related to the outbreak of virus SARS–CoV–2 or coronavirus disease 2019 (COVID–19).’ It is unlikely Congress intended to save these entities from excise taxes only to impose tens of thousands of dollars in facility fees from an unfamiliar regulator,” the notice says.

In a statement, Distilled Spirits Council of the U.S., said: “This is a terrific outcome that will ease the minds of hundreds of distillers who answered the call to make hand sanitizer during this national public health emergency.  We want to thank HHS leadership for listening to our concerns and for their commitment to ensure that distillers who supported their communities are not unfairly charged this fee.”

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