Untangling the complex world of wine direct shipping and compliance

December 23rd, 2009

Each January, monthly, semi-annual and annual reporting periods for direct shippers collide for a perfect report storm. This year, for wineries that ship to all available states, 69 different direct shipping and tax reports are due—53% more than the average monthly load.

In 2009, direct shippers were required to submit a total of 722 direct shipping and tax reports, which includes 2 additional annual reports and 34 additional report submissions from new states that opened up this year. With currently available states, the total number of report submissions in 2010 will be 741.

Direct shippers can help ease the increased reporting burden with these steps:

1. Start Early
   Many annual reports require detailed information not always stored with your order data, such as tracking numbers, dates of birth, and label identifiers (TTB IDs/COLA numbers). Gathering that information now and collating with shipments can only help reporting go more smoothly.
2. Store Common Carrier & Tracking Numbers with your Orders
   In particular, Missouri’s Form 12 and Form 40 Direct Shipper Annual Report and Tax Computation require each tracking number to be listed with its respective shipment. Virginia requires the common carrier to be specified for all orders shipped to recipients within the state.
3. Store Label IDs with Product Information
   For example, New York’s semi-annual report due in July and January requires the ‘TTB ID’ from the Certificate of Label Approval (COLA) of each bottle shipped to a consumer in New York.
4. Collect and Store Date of Birth with Shipping Orders
   Wisconsin and Michigan require you to report the DOB of the purchaser and recipient of each shipment into their state. Michigan law states, “The person receiving and accepting the order on behalf of the direct shipper shall record the name, address, date of birth, and telephone number of the person placing the order…”
5. Collect Orders & Submit Reports Electronically
   North Dakota, New York and Wisconsin now require you to submit your summary report and listing of invoices electronically. Other states offer it as a more convenient option than paper filing.

Maine

• Sales and Use Tax Return – Short Form
1. Monthly, quarterly, semi-annual or annual
2. Almost all of the wineries licensed in Maine will be filing the sales tax return for the first time this January (due January 15).
• Combined Table Sparkling and Fortified Wine Tax Report and Schedule
1. This annual report is due January 10

Tennessee

• ALC 102 Wholesale Alcoholic Beverage Return for Direct Shippers of Wine
1. Originally due monthly, Tennessee has now requested an annual file date of January 15
2. Wet areas only
• SLS 450 State and Local Sales and Use Tax Return
1. Monthly, quarterly or annually, due within 20 days of period end

Kansas

• ABC-1040 Special Order Shipping Annual Gallonage Tax Return and Sales Report
1. Due annually, within 15 days of period end
• LE-3 Liquor Enforcement Tax Return
1. If you are licensed in Kansas, you have likely already submitted the monthly Enforcement tax return.

New York

• A new policy (in effect July 2009) allows approved wineries to file the MT-40 annually instead of monthly

Wisconsin

• This October, Wisconsin began requiring local taxes to be paid when filing the ST-12

Contact ShipCompliant to learn how you can reduce your compliance burden by over 90% even while the total number of reports due to increase.

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December 4th, 2009

On November 19, Terri Beirne, Wine Institute’s Eastern Counsel, met with the Virginia ABC Board, their Director, and representatives of Wine America and the Virginia wineries to continue discussions about the July Circular Letter 09-05 prohibiting direct shippers from using any third party service providers. Despite earlier indications, the Board has no plans to issue additional circulars on this issue. They suggested that a statutory change is essential to reinstate use of pick and pack/fulfillment warehouse and other third party service providers by Virginia licensees. They also offered to work with industry to craft legislation for the 2010 Virginia General Assembly Session which starts on 1/13/10 and concludes on 3/13/10.

However, the VA ABC offered two interim solutions for Wine Institute members until the law can be changed. Nothing in Virginia law currently prevents direct shipper licensees from obtaining two (2) direct shipper licenses with two different addresses, even though a second location is not owned or controlled by the licensee. Therefore, if a winery sends wine from BOTH their tasting room and a fulfillment warehouse, it can keep a current direct shipper license intact and secure a second one with the address of their fulfillment facility, from where wine can also be shipped. The Virginia direct shipper license application fee is $65 and the annual license fee is $65. Separate tax payments and reports associated with each licenses would have to be filed.

Additionally, if the winery sends ALL wine shipments into Virginia from a pick and pack warehouse with NO shipments originating in their tasting room, the winery’s Virginia direct shippers license could be changed to list the address of the warehouse from which ALL wine will be shipped. Wineries may make such an amendment to a current license by sending a letter on winery letterhead explaining the reason for the change and including the old and new addresses to Dallas “Burnie” Gaskill, VA ABC Licensing Technician at P.O. Box 1597, Spotsylvania, VA 22553-1597. Burnie can be reached by phone at (540) 538-7838 or e-mail at dallas.gaskill@abc.virginia.gov with questions. Such letter MUST include a copy of the state license issued to the warehouse making shipments on the winery’s behalf. The letter must also contain an e-mail address for the winery, where the amended license will be sent in an electronic format.

Members can contact Annie Bones at abones@wineinstitute.org or at (415) 356-7530 with additional questions. Terri would also be pleased to talk more about this situation and can be reached at (804) 301-5505 or tbeirne@wineinstitute.org.

-Terri Cofer Beirne, Eastern Counsel, Wine Institute

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