II 115th CONGRESS 1st Session S. 389 IN THE SENATE OF THE UNITED STATES February 15, 2017 Mr. Wyden (for himself and Mr. Gardner ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to ensure that kombucha is exempt from any excise taxes and regulations imposed on alcoholic beverages.

1. Short title This Act may be cited as the Keeping Our Manufacturers from Being Unfairly taxed while Championing Health Act or KOMBUCHA . 2. Tax-free production of kombucha (a) Exception from definition of brewer Subsection (d) of section 5052 of the Internal Revenue Code of 1986 is amended to read as follows: (d) Brewer (1) In general For purposes of this chapter, the term brewer means any person who brews beer or produces beer for sale. (2) Exception The term brewer shall not include any person who— (A) produces only beer exempt from tax under subsection (e) of section 5053, or (B) produces only kombucha exempt from tax under subsection (i) of such section. . (b) Exemption from tax Section 5053 of the Internal Revenue Code of 1986 is amended— (1) by redesignating subsection (i) as subsection (j), and (2) by inserting after subsection (h) the following new subsection: (i) Production of kombucha (1) In general Subject to regulation prescribed by the Secretary, any person may, without payment of tax, produce kombucha for consumption or sale. (2) Definition For purposes of this chapter, the term kombucha means a beverage which— (A) is fermented solely by a symbiotic culture of bacteria and yeast, (B) contains not more than 1.25 percent of alcohol by volume, (C) is sold or offered for sale as kombucha, and (D) is derived from— (i) sugar, malt or malt substitute, tea, or coffee, and (ii) not more than 20 percent other wholesome ingredients. .