Massachusetts DTC Applications – How to Get Started

As ShipCompliant reported earlier this week, the new Direct Wine Shipper License application and advisory were released over this past weekend. The new permit law replaces the existing unworkable direct shipping law in its entirety. See the previous post to read more about how the new laws, in effect starting January 1, 2015, apply to wineries.

It is expected to take approximately four weeks for applications to be approved. Wineries may NOT engage in any “sales activities” prior to January 1, 2015. (or their license is approved.) Both the Direct Wine Shipper License application and Direct Wine Shipper License Advisory are available on the Wine Institute, ShipCompliant, and Massachusetts Alcoholic Beverages Control Commission (ABCC) websites. Below please find instructions on how to complete the application process. Questions about the application requirements can be directed to Ralph Sacramone of the ABCC at 617-727-3040 ext. 731 or to Annie Bones at abones@wineinstitute.org.

MASSACHUSETTS NEW DIRECT WINE SHIPPER LICENSE APPLICATION INSTRUCTIONS
Step 1: Register with the Department of Revenue to Pay Sales and Excise Taxes

  • Go to MassTax Connect to Register and Pay Excise Taxes (note the date of registration as you will need to enter this on the DTC application.)

Step 2: Application for a Direct Shipper Wine License (effective 1/1/2015)
Part 1 – Applicant Information and Legal Structure

  • Attach vote by the Board of Directors or LLC Managers appointing a manager or principal representative
  • Articles of Organization as filed with the Secretary of State’s Office

Part 2 – Licenses to Manufacture and Export Wine

  • List and attach a copy of your California 02 Winegrower license

Part 3 – Federal Compliance

  • List and attach a copy of your TTB Basic Permit Number
  • List and attach a copy of your FDA Registration

Part 4 – Tax Registration

  • Enter the date that you registered with the MA Department of Revenue to pay sales and excise taxes

Part 5 – Interests in this License

  • All of the limited partners must be listed

Parts 6-8

  • Follow the application’s instructions and provide affidavit(s) if necessary

Part 9 – Previously Held Interests in Other Licenses

  • All of previously held interests must be listed

Part 10 – Transportation and Delivery

  • FedEx Ground should be listed. FedEx Express and UPS are not licensed to deliver DTC wine shipments to MA consumers at this time. The application can be updated by letter if FedEx Express, UPS or any other common carrier enters the market and intend to use their services.

Part 11 – Proof of Age for Sale to Consumers

  • The Code for Direct Shipping Guidelines (http://freethegrapes.org/code-for-direct-shipping) recommends that direct shippers verify the purchaser’s age at the point of online purchase using an approved age verification vendor, such as LexisNexis or IDology.

Part 12 – Proof of Age for Delivery to Consumers
FedEx Ground Control Processes for Alcohol Shipments: FedEx Ground requires Alcohol Shippers to sign a special contract addendum outlining labeling and information requirements

  • Shippers must use FedEx® ShipManager electronic shipping solutions or an approved third-party system
  • Shippers must enter a unique identifier – $AW, in the “Your Reference” field for all wine shipments
  • Shippers must select Adult Signature Service as a condition of delivery of the shipment
  • All wine packages must be labeled with a FedEx approved alcohol label
  • An Adult Signature Service “code” is embedded in the unique bar code tracking ID
  • Delivery scanners alert drivers of the adults signature requirement at point of delivery scan
  • If no eligible recipient is at the address, the scanner prompts driver to apply the proper status code and reattempt delivery at a later time/date
  • FedEx will obtain a signature from any person at least 21 years old (government-issued photo identification required) at the delivery address
  • Part 13

    • Follow the application’s instructions

    Step 3: Direct Wine Shipper License Application Checklist

    • Check payable to ABCC or Commonwealth of MA for $300
    • Transmittal Form
    • Completed Application
    • Articles of Organization as filed with the Secretary of State’s Office
    • Vote by the Board of Directors or LLC Managers appointing a manager or principal representative
    • A copy of your California 02 Winegrower license
    • A copy of your Federal Basic Permit
    • A copy of your FDA Registration

    Send to:
    Alcoholic Beverages Control Commission
    P.O. Box 3396
    Boston, MA 02241-3396

    Annie Bones, State Relations – Wine Institute

    New Direct Wine Shipper License Applications Now Available for Massachusetts


    As we discussed in a previous post, Massachusetts opening to direct shipping is probably the biggest change that we have seen in direct wine shipping since the Granholm Supreme Court decision of 2005. Over the weekend, the Massachusetts ABCC updated their website with a brief advisory on the new direct shipping law that summarizes the law and provides instructions on how to complete the permit process, and how to comply with the reporting requirements.

    Click here to download the Massachusetts direct shipping application (if you are having trouble downloading the application from the Massachusetts website, click here).

    Here’s a quick summary of the new law:

    • Only wineries that hold a TTB license and a license to produce in and export out of their state can qualify for the Direct Wine Shipper License
    • Each licensed direct shippers can ship up to 12 9-liter cases of wine to any one individual per calendar year
    • Direct shipping reports will be due on an annual basis
    • Sales tax is not due for wine products, but is due for any non-wine items such as merchandise
    • Excise taxes will be due on all shipments

    The 7-page application is fairly straightforward, but in addition to some of the usual information (like business and business owner information), you’ll need to answer a couple out-of-the ordinary questions. Note: We’re working to clarify how to answer a few of the questions with the ABCC, and will update this post once we have more information.

    • First, register with Mass Tax Connect to pay excise taxes. You’ll need to include the date you registered on the application.
    • List all businesses (carriers) that will deliver wine on your behalf; carriers must hold a Winery Shipment Transportation Permit

      An early concern over the new Massachusetts wine shipping law was that it did not address the issue of common carriers having to license each and every truck that delivers wine. However, a bill to allow common carriers to obtain a fleet license for the delivery of alcohol is pending in the Massachusetts legislature. It seems somewhat unlikely that the fleet license bill will move this session. But, we believe that at least one of the common carriers will begin to license each of their trucks and therefore will be able to deliver wine to Massachusetts addresses as early as the beginning of February.

    • List your winery’s methods for proof of age for sale and delivery to consumers.

      See our informative post on 7 tips for better age verification, listing the different age verification methods for online wine purchases

    • Include with the application a copy of 1) the license(s) you hold which authorize manufacture and exportation of wine; 2) your TTB Permit; and 3) your FDA Registration
    • Finally, include a check for $300. Make the check out to the “Massachusetts ABCC” and denote the name of the licensee

    We expect Massachusetts will represent an extremely important opportunity for wineries. If is approved, a process that may take as long as four weeks, you can start taking orders as soon as January 1, 2015!

    UPDATE: For a step-by-step guide on filling out the application form, see our following blog post, “Massachusetts DTC Applications – How to Get Started“. Please note: Applicants do NOT have to register to pay sales tax; contradictory towtheyted on the application form, however, applicants MUST apply to pay excise tax at Mass Tax Connect.

    How to make compliant shipments to Arkansas

    Following up on Sarah’s post about the new permit applications being available in Arkansas, we wanted to give you a quick update on how we’re handling some of the unique requirements in the Arkansas law. The bottom line is that you can now make compliant shipments to Arkansas if you’ve completed the permit process. Continue reading below for the full details of how we implemented this new state in ShipCompliant…

    1) We deployed the updates to production last night. We also activated the appropriate rules in the ShipCompliant Direct database. The first thing to note is that this permit allows you to make onsite shipments only. Therefore, if you pass in a shipment with an Order Type of Internet, Phone, Mail, Fax, or Club (all of which map to an “Offsite” Sale Type), the order response will be Non Compliant. Shipments with an Order Type of In Person will results in a Sale Type of Onsite and therefore will be compliant if all other rules checked are also compliant.

    2) Because the Arkansas DFA is going to accept the FedEx and UPS standard alcohol shipping labels and stickers as meeting the requirement for special shipping labels, we did not add any custom rules to comply with this provision. Using your standard alcohol shipping practices here will achieve compliance with respect to the labeling provision.

    3) We did add a new rule called for the provision that requires all shipments to be delivered to a residential address. If you are using version 1.1 or 1.2 of the API will see this rule type come through as Business Address Shipping Prohibited. Please work with Emily Sheehan, our Integration Specialist, if you have any questions about handling or testing this new rule type. The rule is live now in Arkansas in our sandbox (dev) and demo (demo) environments.

    4) When shipments are sent to ShipCompliant, they are checked for compliance against our rules database and that process always includes an address validation step prior to determining the rules that are applicable for that shipment. As part of our algorithm for validating addresses, we’ll always set the Residential Business Delivery Indicator (RBDI) flag to either R for Residential or B for Business per USPS standards. When checking this new rule type for compliance, we’ll look at that flag and only shipments with an RBDI set to R will pass the compliance check process.

    In summary, if you have a permit and make an onsite shipment to a residential address in Arkansas, an order will now pass the compliance check process in ShipCompliant once you acknowledge the new rules in ShipCompliant Direct. We’ve included two sample XML responses below to illustrate both compliant and non-compliant shipments to Arkansas.


    Arkansas opens for wine shipments, but only for onsite sales going to private residences


    Wineries may now apply for an Arkansas “Wine Shipping Permit”, making the state available to onsite direct wine shipments only for the first time. The application for the $25 license may only be obtained by calling the Arkansas Alcoholic Beverage Control Division (the ABC’s number is 501-682-1105) and requesting an application be sent to the winery applicant. Once the application for the ABC has been submitted, the applicant can begin the process of obtaining sales tax and vinous liquor excise tax licenses. The entire process could take up to three to four weeks to complete. Upon receipt of approved licenses, the winery may then begin to legally ship direct-to-consumer wine orders to Arkansas residents.

    Requirements of the Licensee

    1. Licensed Wine Shippers may ship up to one case to an Arkansas resident per calendar quarter.
    2. Licensees must regularly remit excise taxes, vinous liquor excise tax (3%) and state sales tax (6.5%). Please note, if you register online to pay taxes, you will be required to file and pay online (strongly recommended). Similarly, if you register via paper application to pay taxes, you will be required to file and pay using paper forms.
    3. Arkansas is the only state that requires wineries to obtain a license to ship onsite-only orders (placed in person at the winery) unlike the other onsite-only states, open via Federal Onsite (Delaware, Oklahoma, Rhode Island and South Dakota). Internet, club and phone orders are not allowed.
    4. As noted in our previous blog post, a special shipping label must be on every shipment; however, the alcohol-specific shipping labels provided by UPS and FedEx will satisfy this requirement.
    5. Wineries may only ship to residential addresses (no shipping to businesses or commercial locations), a requirement unique to the state of Arkansas.

    Resources:
    Sample Arkansas Wine Shipping Permit and Instructions (call the state’s ABC to obtain your individual application – 501-682-1105)
    Online Registration for Sales and Vinous Liquor Excise Taxes (click on “New Business Registration”; online registration is recommended)
    Further instruction on how to register for a Sales Tax Permit
    Act 483, To Permit the Direct Shipment of Vinous Liquor from a Winery to Arkansas Residents

    South Dakota Takes Wine Product Registration Online

    Product renewals for 2014 in South Dakota can now be done online. South Dakota now joins Arkansas as one of the most recent states to institute on-line product registrations, continuing the trend toward digital product registration, away from the realm of pulp and fiber and into the digital space.

    Suppliers of wine, spirits and beer to South Dakota can complete their product registration renewals for 2014 via South Dakota’s new on-line product registration portal. Paper-based product registration is still an option – forms, fees and instructions for paper registration are available on South Dakota’s Special Tax Division website.

    HOW SOUTH DAKOTA’S ON-LINE PRODUCT REGISTRATION WORKS
    To utilize the new South Dakota on-line product registration portal, suppliers will need their 4-digit “BR License Number” (provided in a recent communication from the state) as well as an email address. Upon logging in, suppliers will see a list of all currently registered products associated with their BR License Number. Suppliers need merely click the box next to the product they would like to renew for distribution in 2014. Should suppliers find that they would like to edit any details of their products (i.e. to add a COLA # or edit the label description), it is possible to easily edit details of any product. All renewals are preliminarily approved upon submission. State fees for on-line registration of wine products is $30 for an initial label of a brand and $22.50 for subsequent labels under the same brand. The fee for on-line registration of beer is $30 per label, and for spirits $55 per label. Payment may be made by credit card or check.

    South Dakota’s new on-line product registration will allow suppliers to more quickly register new products, renew, and edit products currently licensed and in distribution in the state.

    Anyone with any questions, please leave a comment here, or contact Tonna Finch at the SD Department of Revenue by email, or by phone at 605-773-5397.

    Wine & Spirit Suppliers to Arkansas Must Register Products by End of Year

    With passage of HB 1480 (now titled “Act 1105“), the state of Arkansas is requiring that all wine and spirits suppliers actively distributing wine and spirits into the state must register each distributed product with the state. Wine & spirits products (beer is not required) currently in distribution must be registered by December 31 and all registration takes place on-line.

    The state fee for on-line product registration is $20/label. Suppliers can no longer send the “Manufacturer’s Request for Brand Registration or Change of Wholesaler” form in a paper format. This is now done on-line.

    How to Register Your Currently Distributed Products:

    1. Visit Arkansas’ Electronic Registrations Website
    2. Have a list of your actively distributed COLA numbers, names of your Arkansas distributors, and any brand owner authorization letters if the registrant is not the owner of the brand being registered with the state
    3. Payment is via credit card

    Through December 31, 2013, suppliers may download an excel spreadsheet of their COLAs by Federal Basic Permit Number. Labels will initially be approved directly upon completion of workflow process. The state will review incoming registration to ensure non-violation of sole source requirements and other rules and regulations.

    IMPORTANT:
    -All currently active products must be registered by December 31
    -Product registrations are valid through June 30, 2014
    -Label Registration status can be verified by COLA Number
    -Newly distributed products may be registered beginning January 1, 2014

    Feel free to ask any questions you may have about Arkansas product registration on this blog post and we will answer them as quickly as possible.