December 15th, 2010
|Summary||Wine producers domiciled in states that accept direct shipments from New York wineries can qualify for a direct shipping permit after registering to collect sales and excise tax. Varying volume limits apply depending on which state the winery operates from. New York State offers a substantial market for direct shippers; New York ranks third in the top state markets for wine direct shipments.|
|Approved & Active Carriers||FedEx, UPS (off-site only)|
|Shipping Rules||Tax: Wineries must pay excise and local sales tax for both on-site and off-site sales to New York State residents. Excise tax is $.30 per gallon and is due monthly, however, wineries may opt to file their excise tax report (form MT-40) yearly instead of monthly by submitting the MT-38 application. Sales taxes range from 7% – 8.875% depending on the destination. Quarterly filing is the default frequency for most filers, but monthly and annual frequencies are also available; returns must be filed even if no shipments were made.|
|Permit: To be able to direct ship to New York residents, wineries must first submit the DTF-17(free) to register to collect sales tax and the TP-215. Both applications should be submitted to the New York State Department of Taxation and Finance. Once the DTF-17 has been approved, the tax department will send the applicant a “Certificate of Authority.” Upon receipt of this certificate, the applicant may then submit their Application for a New York State Out-of-State Direct Shipper’s License ($125.00) to the Division of Alcoholic Beverage Control. When the TP-215 and Out-of-State Direct Shipper’s License Application are approved, the winery can ship wine directly to New York residents. Direct shipper permits are valid for one calendar year (January 1 to December 31) and may be renewed for $125.00.|
|Customer Volume Limit: There is a maximum volume limit of 36 cases per individual per year for combined on-site and off-site sales in New York. However, this volume limit varies depending on how much wine the winery’s state of domicile allows New York wineries to ship to their residents. California wineries, for example, are allowed to ship 36 cases per individual per year while a winery located in Missouri (which permits only two cases per consumer per month to its residents) can only ship two cases per month to a New York State consumer.|
|License Requirements||According to New York’s Alcohol Beverage Control Law § 79-c, “to be eligible for a Direct Shipper’s License, the applicant out-of-state wine manufacturer must be located in a state that affords to New York State wine manufacturers substantially similar direct shipping privileges.” As part of the Direct Shipper’s License Application, wineries must submit a letter from their state of domicile, stating that they allow shipments of wine to their residents from New York wineries – an example letter (California) can be seen here. In addition to payments of sales and excise taxes, New York also requires a semi-annual shipment report, which requires the carriers name and address for wine orders shipped into the state. The report must be submitted electronically, in either Excel or .csv format.|
|History||Swedenburg v. Kelly & Granholm v. Heald
Following conflicting decisions in New York’s
Swedenburg v. Kelly and Michigan’s Heald v. Engler, the Supreme Court consolidated the two disputes in the case of Granholm v. Heald (2005). The court ruled in favor of the claims of the petitioners in Granholm v. Heald, that New York and Michigan liquor laws were in direct violation of the Commerce Clause by hindering interstate commerce. Subsequently, New York and Michigan were forced to make their direct shipping laws equal for both in-state and out-of-state wineries. New York’s ABCL §79-c was the resulting regulation implemented by New York State.
Arnold’s Wines v. Boyle (2007)
Arnold’s Wines filed a suit in 2007 against chairman of the New York State Liquor Authority, Daniel Boyle, citing discrimination against out-of-state retailers. Arnold’s Wines claimed that New York liquor laws violated Granholm (2005) on the grounds that in-state retailers were permitted to ship to residents while out-of-state retailers were not. The U.S. District Court for the Southern District of New York ruled against Arnold’s Wines. The case was appealed in 2009, but the 2007 district court decision was upheld. The court’s ruling has since become a part of an ongoing debate about the three-tier system within the industry.
|Litigation / Legislation||There is currently no legislation affecting direct shipping in New York State but we will keep our readers posted.|
This entry was posted on Wednesday, December 15th, 2010 at 4:58 pm and is filed under Direct Shipping, New York, Wine Business, Wine Institute. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.