Michigan Alcoholic Beverage Excise Tax: Important change shifts liabilities from supplier to wholesaler on February 1, 2015
The Michigan Liquor Control Commission (MLCC) is making a significant change to the regulations for alcoholic beverage distribution within the state. Beginning February 1, 2015 Michigan alcoholic beverage wholesalers will be responsible for the filing and payment of all wine, malt, and low alcohol mixed spirit drink excise taxes. Please note, all spirits over 10% ABV are controlled by the state and no change or action is needed. Currently, manufacturers and out-of-state suppliers are responsible for excise tax remittance on their sales to Michigan wholesalers. The January 2015 filing period is the last period these suppliers are obligated to complete before Michigan wholesalers must take responsibility for excise tax reporting and remittance. The reports listed below will no longer be completed by suppliers beginning with the February 2015 filing period and onward: The MLCC is still finalizing the new reporting requirements for suppliers and wholesalers and we will let you know when they release more information.
- Michigan Form LCC-3803 Beer Tax Report and LCC-3886 Beer Shipment Report
- Michigan LCC-3890 Wine Tax Report Sales to Distributors
- Michigan LC-MW 891 Mixed Spirit Drink Tax Report
Do I need to change my pricing?
Yes, depending on how you determine the prices at which you sell to wholesalers, action may be required. Most domestic wineries, breweries, and importers calculate the price at which they sell to wholesalers very carefully. It is an equation made up of many supplier and wholesaler costs, including production, logistics, retail prices, excise taxes, etc. The transition of the excise tax collection, reporting and remittance burden from the manufacturers and out-of-state suppliers to the wholesaler will be a joint effort in negotiating prices.
What are my next steps?
- Suppliers can throw away those old forms starting in March because you won’t need them anymore.
- Wholesalers should await notification from the state on new reporting and remittance requirements, they’re still working to finalize the rules.
- Suppliers need to recalculate prices and communicate to their wholesalers.
- Await more information from ShipCompliant and the MLCC on future reporting requirements in March for February sales.
–For Immediate Release–
ShipCompliant and Wines & Vines Release Annual Report Showing Value of Winery Direct Shipments Jumping 15.5% in 2014
(Boulder, COLORADO)—American wineries increased the dollar value of their direct-to-consumer shipments by an unprecedented 15.5% in 2014, with an equally record-breaking increase in the volume of those shipments. The average price per bottle of shipped wine also recovered with a 1.6% increase over 2014, according to the new ShipCompliant/Wines & Vines Wine Shipping Report released today.
The newly released annual report, a collaboration between ShipCompliant and Wines & Vines, can be downloaded at http://www.shipcompliant.com/shippingreport.
The new report on direct-to-consumer shipments held almost exclusively good news, including the fact that in 2014 the volume of shipments increased by 13.6% to 3.95 million cases — or 47.4 million bottles. In addition, the report indicates:
- Oregon wineries increased the value of direct shipments by more than 50%
- Shipments of Pinot Noir increased significantly from 2013.
- The average price of a bottle of wine shipped from wineries rose to $38.40
- Napa Valley continues to lead all other regions with more than $882 million in shipments in 2014.
- The average price of a bottle of Cabernet Sauvignon shipped from Napa Valley was $88.45
- The most expensive categories of wines experienced the largest growth in shipments in 2014.
“The growth we saw in the winery direct-to-consumer channel in 2014 was the best since we began tracking this channel in 2009,” said ShipCompliant VP of Product Jeff Carroll. “There seems very little doubt that direct shipping remains extraordinarily vibrant.”
The ShipCompliant/Wines & Vines annual wine shipping report is based on millions of transactions tracked by ShipCompliant and Wines & Vines’ database of wineries, all of which allows an accurate modeling of the entirety of the winery shipping channel.
ShipCompliant is a SaaS compliance and transaction platform for the beverage alcohol industry. With over 10 years experience, ShipCompliant provides wine, beer and spirits suppliers and importers with a full suite of web-based software tools to ensure compliance with federal and state regulations for direct and wholesale distribution. ShipCompliant works with the industry’s leading software providers and logistics companies to provide fully integrated solutions for direct and three-tier distribution. For more information visit http://www.shipcompliant.com.
About Wines & Vines
Wines & Vines offers a comprehensive collection of products providing news, information and marketing and research capabilities. Its monthly magazine, Wine & Vines, and its Directory/Buyer’s Guide and Online Marketing System provide a wide range of information solutions to the wine and grape industry. For more information visit www.winesandvines.com.
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VP Product, ShipCompliant
Jeff (at) ShipCompliant (dot) com
Folks in Illinois are quite litigious when it comes to occupation and use (aka sales) taxes on transportation or delivery (aka “shipping”) charges. Back in 2006, Wal-Mart was hit with a class action for collecting tax on shipping where no tax was allegedly due. In more recent years, over 200 retailers have been sued by a Chicago attorney for not collecting tax on shipping.
So, should you collect and remit tax on shipping charges, or should you not collect or remit taxes on shipping? If only the answer were so black and white. Important considerations, as you will find in the regulations, cases, and articles listed below, are whether the shipping charges are stated separately in your checkout process and on your invoices, whether the shipping charged to the consumer exceed the actual cost of delivery, and whether you provide the customer an option to pick up the wine at the winery.
The goal of this post is not to provide legal advice, as the decision to collect and remit taxes on shipping in Illinois is based on several different factors and your own individual circumstances are important in determining taxability based on those factors. Instead, our aim is to share as much information as we can so that the industry is armed with the facts of the situation and can make informed decisions. We will continue to update this post with documents, resources, and other information that we find. If you come across something that is relevant, please post it in the comments section below or email us at firstname.lastname@example.org.
1) Illinois Regulations: Title 86 Part 130 Section 130.415 Transportation and Delivery Charges
If the seller and the buyer agree upon the transportation or delivery charges separately from the selling price of the tangible personal property which is sold, then the cost of the transportation or delivery service is not a part of the “selling price” of the tangible personal property which is sold, but instead is a service charge, separately contracted for, and need not be included in the figure upon which the seller computes his Retailers’ Occupation Tax liability. Delivery charges are deemed to be agreed upon separately from the selling price of the tangible personal property being sold so long as the seller requires a separate charge for delivery and so long as the charges designated as transportation or delivery or shipping and handling are actually reflective of the costs of such shipping, transportation or delivery
2) Illinois Department of Revenue General Information Letter: ST 13-0025-GIL 05/28/2013 LIQUOR TAX
Under the Liquor Control Act of 1934, out-of-state wineries who are going to sell wine directly to Illinois residents must complete an Application For State Of Illinois Winery Shipper’s License (“Direct Shipping Permit”), which I have enclosed for your convenience. Further, a licensee who is not otherwise required to register under the Retailers’ Occupation Tax Act must register under the Use Tax Act to collect and remit use tax to the Department of Revenue for all gallons of wine that are sold by the licensee and shipped to persons in this State.
3) Illinois Compiled Statutes: 235 ILCS 5/5-1 (from Ch. 43, par. 115)
A winery shipper licensee must pay to the Department of Revenue the State liquor gallonage tax under Section 8-1 for all wine that is sold by the licensee and shipped to a person in this State. For the purposes of Section 8-1, a winery shipper licensee shall be taxed in the same manner as a manufacturer of wine. A licensee who is not otherwise required to register under the Retailers’ Occupation Tax Act must register under the Use Tax Act to collect and remit use tax to the Department of Revenue for all gallons of wine that are sold by the licensee and shipped to persons in this State.
4) Booze Rules Blog: Illinois Qui Tam Lawsuits – Private Enforcement of a State Claim: A Bonanza for Plaintiff’s Lawyer and a Rip-Off of Retailers
5) Brann & Isaacson: Some Good News for Retailers Regarding False Claims Act Issues
6) Illinois Supreme Court: Nancy Kean vs. Wal-Mart Stores, Inc.
7) Tax Analysts: Illinois Rules Against Chicago “Whistleblower” in False Claims Case
8) Tax Analysts: Qui Tam Troubles, Part 1: An Illinois Informant With No Inside
9) Tax Analysts: Qui Tam Troubles, Part 2: A Relator Seeking to Second-Guess Audits
10) Crain’s Chicago Business: State blows the Whistle on this Whistleblower
11) Cook County Circuit Court: Schad Diamond and Shedden v. National Business Furniture LLC
FedEx announced today that, effective Feb. 1, 2015, FedEx Express and FedEx Ground will open the state of Massachusetts for legal shipments of alcoholic beverages. The announcement provided the following:
- FedEx Ground and FedEx Express will both transport legal alcoholic beverage shipments into, out of and within the state of Massachusetts starting Feb. 1, 2015.
- Please note, unauthorized shipments of alcoholic beverages destined for MA prior to a Feb. 1, 2015 delivery date may not be accepted for delivery and/or returned to shipper.
- Per FedEx policy, all alcoholic beverage shipments may only be tendered by licensed entities that have executed a FedEx Alcohol Shipping Agreement.
- All alcoholic beverage shipments must comply with all FedEx policies and federal, state and local regulations.
- Wine is the only type of alcoholic beverage that is allowed to be shipped to consumers.
FedEx does not provide legal advice to third parties. Questions not related to FedEx policy should be directed to appropriate legal counsel and the Massachusetts Alcoholic Beverages Control Commission.
(The new direct-to-consumer statute goes into effect on Jan. 1, 2015. Under the new law a winery must hold a Direct Wine Shipper license that has been approved by the MA ABCC and be registered to pay excise tax in order to ship to MA consumers.)
Happy Holidays! With Thanksgiving and the busiest shopping day of the year behind us, we have less than one more month of 2014 left. That’s 29 days of finishing resolutions you made last year and even less to buy holiday gifts! It also means that the label renewal periods for a few states are coming to a close! Luckily, South Dakota label renewals can be easily completed electronically in just a few minutes. All you need to know are the labels that you wish to continue to sell in 2015, and your four digit brand registration license number (the ABC can provide this if you’ve forgotten your number). That’s one more item to check off of your list for 2014 so you can get back to breaking out the holiday decorations!
Follow these four simple steps to complete your South Dakota renewals:
1) Click the button below
2) Login using your four digit brand registration number and email address
3) De-select any products you don’t want to renew
4) Complete your renewals by paying via check or credit card
Need help with renewals? Call our free, friendly support department at (303) 996-2356 or email@example.com