• Less than 1,000 gallons – $63
• Between 1,000 and 2,500 gallons – $125
• Between 2,500 and 30,000 gallons – $250
• Between 30,000 and 50,000 gallons – $375
• Between 50,000 and 250,000 gallons – $938

In addition to the listed winery license fees, New Jersey will make out-of-state wineries work hard for entry into the 40th U.S. state to allow direct shipping. The latest information indicates out-of-state wineries must: 1) register their business with the Secretary of State ($125); 2) register their business with the Division of Taxation for payment of state sales and excise taxes; 3) post a beverage tax bond (ranging from $1,000 to $1,000,000 depending on anticipated sales); and 4) submit the license application with the fee, outlined above, to the New Jersey Alcoholic Beverage Control (NJ ABC). New Jersey also requires all products shipped into the state to be brand-registered at a cost of $23 per label.

In an unanticipated twist, corporate laws in New Jersey require any foreign (non-New Jersey) corporation that secures a license from a state agency (for example, a wine shipper’s license from the NJ ABC) to establish nexus with the state. With this nexus, out-of-state winery licensees must also annually file corporate income tax and pay a minimum of $500/year, depending on gross revenues. Partnerships are also subject to a tax of $150/partner/year and annual filing. All wineries applying for the license should be aware that they are subject to this requirement.

On top of direct shipping capabilities for Out-of-State Wineries, with the payment of an additional fee (from $100 to $1000 depending on annual production), licensees may ship directly to New Jersey retailers. Common carriers are not allowed to ship these orders to retailers, and price posting is required on products for sale to retailers. Additionally, licensees have the option to open up to 16 tasting rooms within New Jersey for a fee of $250/site.

Here are the forms referenced in New Jersey’s checklist and instructions, in order of appearance:

• Register for taxes
• Obtain a Beverage Tax Bond
• Complete the Out-of-State Winery License Application
• For each label, complete the Brand Registration Application (Instructions)
• Bi-monthly, file the Alcoholic Beverage Tax Return with Supplemental Schedule

We realize that the application process in New Jersey is a little daunting, so ShipCompliant has already geared up EasyWineLicensing.com to facilitate the licensing process. Visit www.easywinelicensing.com before May 15th with the coupon code “EWLNJ” and save 35% off ShipCompliant service fees to obtain a New Jersey direct shipping license.

On August 23, 2010 the Kansas Department of Revenue issued Revenue Ruling, No. 19-2010-03 which states that taxpayers are not required to remit alcoholic beverages gallonage tax due and owing for the reporting period, if the amount is less than $5. The change in policy was made due to the administrative costs associated with processing payments of less than $5. The ruling does not exempt a licensed direct shipper from any reporting requirements. The reporting period for Special Order Shipper Licensees is one calendar year. Gallonage reports are due no later than January 15th of the following year.

The Special Order Shipping License is required for all offsite shipments to consumers in Kansas and requires wineries to use an approved age verification service and to pay enforcement tax and gallonage tax when applicable. The shipping license is not required for on-site sales. Any winery may ship to a Kansas consumer that purchases wine when visiting their tasting room. Applications and additional direct shipping information is available on the Wine Institute website.

-Annie Bones, State Relations, Wine Institute

In 2004, 13 states had wine shipping reciprocity provisions. Essentially, reciprocal states allowed any winery to ship into their state as long as that winery’s state allowed an equal reciprocal privilege. The Granholm decision of 2005 effectively declared reciprocity unconstitutional (pop quiz: would reciprocity provisions be beyond challenge if HR 5034 passed?). Since then, 12 of the 13 reciprocal states have adopted permit systems that allow wineries from any state to ship in as long as they stay in compliance with the direct shipping rules.  Now that Iowa’s new permit system is live, New Mexico stands alone as the only remaining reciprocal state. Previous attempts to bring New Mexico into compliance with Granholm have to date been unsuccessful, so the reciprocity statutes remain in effect.

Don’t Forget to Remit Iowa Excise Taxes

Speaking of Iowa, effective July 1st wineries from any state (previously the reciprocity provision restricted the states from which wineries could ship into Iowa) can ship into Iowa so long as they are actively licensed as a "Wine Direct Shipper". Licensed shippers are required to remit excise tax monthly to the Iowa Department of Commerce – Alcoholic Beverages Division (ABD), and the first excise tax report is due this month. Each monthly report should be postmarked by the 10th of the month.

Although it’s possible that electronic filing may be available in the near future, for now the ABD is requiring that licensees complete the Report of Wine Shipments to Iowa Consumers spreadsheet, print it out, and mail it to:

Iowa Dept. of Commerce, Alcoholic Beverages Divisions
ATTN: Tax Division
1918 S. E. Hulsizer Road
Ankeny, IA 50021.

The form is fairly self-explanatory. For each shipment, licensees fill out the name and address of the recipient, the date of shipment, invoice number, total gallons of wine shipped, the shipping company (UPS, FedEx Express, or FedEx Ground), the amount of wine tax owed (multiply total gallons by $1.75), the permit number of the shipping company (UPS=AC0000003, FedEx Express=AC0000002, and FedEx Ground=AC0000001), and the tracking number of the package(s) that shipped. Reporting the tracking number and shipping company is not new to wineries as New York, Missouri, and Virginia all require one of the two data points.

Once you have completed filling out the spreadsheet, print out the completed form and make your payment out to “Iowa Alcoholic Beverages Division”. Stuff your envelope with the form and the check, and make sure it is postmarked by August 10th!

The direct shipping applications for Iowa are now available. As of July 1, 2010 Iowa will require wineries to obtain a direct shipping license to ship wine directly to consumers. Previously a reciprocal state, Iowa’s borders will soon be open to all wineries across the country who obtain a permit, regardless of reciprocity status with the state. Additionally, there are no restrictive requirements on the winery (such as a volume production cap), making Iowa’s market accessible to all permitted wineries.

The permit application can only be completed online at Iowa’s elicensing website. You may view Iowa’s user guide for instructions on how to begin the licensing process. The “Wine Direct Shippers License (DS)” requires a fee of $25 and a $5,000 bond. Though the direct shipper license application is completed online, copies of state and federal winery licenses, and bond should be mailed to the Iowa Department of Commerce, Alcoholic Beverages Division. Monthly reports and excise taxes are required although they have yet to release these forms. Iowa will not require wine direct shippers to collect sales tax. Start your application process today and be one of the first to become compliant in Iowa.

Direct shipping permits for Michigan are renewable on May 1. The annual renewal cost for the Michigan Permit is $100; the same as the initial permit fee. For those wineries that do not have a direct shipping permit for MI now is good time to consider applying. Licenses are valid from May 1 – April 30 and the $100 fee is not prorated.  The permit allows wineries to ship up to 1,500 9-liter cases to Michigan consumers.  Brand registration is required. This can be completed through the MLCC’s online label registration program for no fee. Sales tax and excise tax must be paid and reports must be filed.

New Hampshire

New Hampshire has updated its direct shipping permit application. The updated application is now available on Wine Institute’s website along with the instructions. Please be sure to complete the application in its entirety and attach all required documents. Incomplete applications will be returned.  Applicants will be happy to note that there is no permit fee. Approved shippers are allowed to ship up to 60 containers of not more than 1 liter each to each consumer during a calendar year. Monthly reports and tax payments are required.

Tennessee

The Tennessee Alcohol Beverage Commission has updated their ”Direct Shipper Application Requirements – ABC” document posted on the TN ABC and Wine Institute websites. The original version of the document did not include the “Wholesale Gallonage Letter” requirement. The Wholesale Gallonage letter is one of 2 documents issued by the TN Department of Revenue that wineries must submit with their application. The second document is the “Certificate of Registration for Sales and Use Tax.”  While the application on the TN Department of Revenue website says a bond is required, a bond is not required for wineries. For the TN DOR wholesale gallonage and sales and use tax application form, go to:  http://www.state.tn.us/revenue/forms/general/f13005_1.pdf.   Licenses are valid 1 year from the date issued and the annual license fee is $150.00. There is also a 1 time non-refundable application fee of $300.  Additional information about the application process is available on the Wine Institute website. Wineries may also contact Sharon Loveall at the TN Alcoholic Beverage Commission with any questions about winery direct shipping permits at 615.741.1602, ext. 141

By Annie Bones, State Relations – Wine Institute

Bonds

Some states require wineries to obtain a bond in order to secure a direct shipping license. A bond is a written guaranty, purchased from a bonding company (usually an insurance firm or a surety company), to guarantee that all taxes due will be paid to the state. If there is a failure to pay, the bonding company will make good up to the amount of the bond.

Bonds for direct shippers range from $500-$1500 depending on the state, but premiums, or out-of-pocket costs, to wineries typically average around 10% of the total bond price, or $50-$180 out-of-pocket on an annual or biannual basis. Different bonding agents may quote different rates, so it pays to shop around.

Connecticut, Idaho, Illinois, Indiana, Kansas, Texas and Wisconsin all require that wineries secure a bond before submitting your license application. For wineries that ship 40,000 gallons or more annually, Oregon issues a bond document after the license application has been received but before the license is issued. Wineries that ship less than 40,000 gallons to Oregon annually can apply for a bond wavier.

Label Registration

Several states require brand or label registrations for direct shipping. Ohio, a state that 26% of direct shippers have in their program, requires wineries to register all the labels that will be shipped into the state for a one-time registration fee of $50 per label.

If that sounds pricey to you, consider Connecticut who charges $200 per label and requires labels to be re-registered every 3 years if they are still actively shipped into the state.

Georgia, Michigan, New York, North Carolina and Virginia do not charge a fee though label or brand registration is required in these states.

Application Fees

Some states may require business, Secretary of State or tax registration, or other one-time application fees. This varies from state to state and depends on how your business is structured. Wineries that start shipping to Arizona, Connecticut, Hawaii, Kansas, Maine, Michigan, North Carolina, Ohio, Tennessee, Virginia or Wisconsin may encounter one or more of these fees.

License, bond, label registration and application fees all factor into the true break-even costs of shipping to a new state. The key to ensuring a profitable direct shipping program is to research thoroughly in order to avoid getting caught off-guard with unexpected costs.

Once wineries have received their Retailer’s Certificate they can submit their completed direct shipper application to the Liquor Licensing and Inspections Unit, along with a copy of their federal basic permit and application fee. The direct shipper application must also be notarized. Once wineries receive their direct shipping permit they will be responsible for paying excise tax to the Department of Public Safety and sales tax to Revenue Services. In addition, a direct shipping report must be filed twice a year. Reporting forms will be posted on the Wine Institute website once they become available. Should you have any questions please contact Annie Bones in Wine Institute’s State Relations Department at abones@wineinstitute.org.

Annie Bones, State Relations – Wine Institute

The first step in the direct shipper application process is registering to pay taxes, by submitting an “Application for Registration” to the Department of Revenue. The “Application for Registration” form must be completed by hand (Do Not file online version of the application.) Direct Shippers should select “Wholesale Gallonage” and “Sales and Use Tax” in section 1 and describe their business activity as “direct shipping” in section 15. Direct Shipper’s are not required to post a bond.

Once the Department of Revenue has processed the application for registration the direct shipper applicant should receive two documents: a “Certificate of Registration” and a letter confirming the tax registration process has been completed. Do not submit the Direct Shipper License application to the Alcoholic Beverage Commission before receiving these documents. The confirmation letter issued by the Department of Revenue must be submitted with the Direct Shipper License application. Direct shipper license applicants must pay a one time non-refundable fee of $300.00 and an annual license fee of $150 to the Tennessee Alcoholic Beverage Commission before receiving their license. Payment totaling $450.00 should be included with the application packet. In addition, the following documents should be submitted with the direct shipper’s license: copies of contracts with common carriers shipping wine to Tennessee consumers (also known as “Alcohol Shipping Agreement”), a copy of the applicant’s organizational document, and a copy of the applicant’s federal basic permit.

The direct shipper’s license is valid for 1 year from the date of issue. Direct shipper’s must file reports, pay a state sales tax of 9.25% and pay excise tax. The Department of Revenue will send the appropriate reporting forms and instructions to licensees based on their filing status. The application forms and instructions are available on the Wine Institute website. Wineries should remember that shipping to consumers in Tennessee without a license is classified as a felony. Should you have any questions please contact Wine Institute’s State Relations Department at 415-356-7530 or abones@wineinstitute.org.

-Annie Bones, State Relations – Wine Institute

The application states that direct shippers may only ship to wet areas within the state; a condition that may make the state slightly less available than initially anticipated. This requirement is different than those of other states such as Florida, New Hampshire and New York, where clearly defined dry areas are prohibited from shipping. Major cities such as Memphis, Nashville, Knoxville, and Chattanooga are all considered wet areas that are open for shipping.

Tennessee direct shipping license applications are available by directly contacting the Tennessee Alcoholic Beverage Commission at (615) 741-1602. The license requirements and application can also be viewed online. Wineries that prefer a full concierge service for obtaining their license can order online through easywinelicensing.com.

To obtain a direct shipping license, wineries must first register with the Tennessee Department of Revenue. Once this step is complete, wineries pursuing a direct shipping license must submit the following to the State of Tennessee ABC:

• License application (available from state)
• $450 fee ($300 one-time application fee + $150 licensee fee, payable upon approval of application)
• Copy of Certificate of Registration for Sales & Use Tax
• Copies of all contracts with common carriers that will ship wine to Tennessee residents
• Copy of the applicant’s organizational document (e.g. corporate charter or articles of organization)
• A copy of applicant’s Federal Basic Permit

Tennessee direct shipping licenses expire December 31 of every year, and renewal applications must be postmarked by January 9 of the following year to avoid a $250 citation.

Licensed wineries can ship a maximum of one case per month and up to three cases annually to Tennessee residents. Retailers are still prohibited from direct shipping to Tennessee.

TN Cities With Liquor Store and Counties

As of today, Kansas residents have direct access to up to twelve cases of wine per address from licensed wineries per year. Kansas special order direct shipping license applications are available online. After registering with the Secretary of State for $36, wineries must submit proof of business tax registration, a $50 license fee, a $50 application fee with their license application as well as post a $750 bond.

Nearly one month ago on June 5, Tennessee Governor Phil Bredesen signed Senate Bill 166 into law to open Tennessee for direct shipping on July 1. Tennessee ranks in the top 25 wine consuming states.

Both state licenses are available for order with full concierge service through easywinelicensing.com.

North Dakota Excise Tax Decreases
Beginning today, sparkling wine will be taxed at $0.50/gallon, down from $1.00/gallon.

Nevada State-Wide Sales Tax Increase
Effective July 1, Nevada has increased its Local School Support Tax from 2.25% to 2.6%; a 0.35% increase in state-wide sales tax. This new tax will be collected at a local level. Also, the 0.25% Collection Allowance, scheduled to increase back to 0.50%, remains in effect for sales and use taxes collected.

Local Tax Increases
The following local tax rates are effective today:

• In Arizona, the city of Kearny has increased its retail and use tax rates from 2.5% to 3.0%
• In California, voters in Los Angeles County approved a new 0.50% district tax increasing their tax rate to 9.75% (including the 8.25% state tax rate). Also, the City Council of Laguna Beach located in Orange County voted to repeal the 0.50% Temporary Transactions and Use Tax prior to its scheduled end date, lowering their tax rate to 8.75%
• In Georgia, the counties of Camden, McIntosh and Wayne will increase their local tax rates by 1%, making the total local option tax 3.0%
• In Washington, sales and use tax within all of Wahkiakum County will increase one-tenth of one percent. The new rate will be 7.6%

Ohio Electronic Filing
For Ohio Sales and Use tax semi-annual filers, the January – June return is the first return that is required to be filed online. There are two filing methods available to direct shippers to report Ohio sales taxes electronically:

1. Express Data Entry – Upload a .CSV to the Ohio Business Gateway (OBG), and make any final adjustments on the OBG’s website
2. eForms – Enter tax calculations step-by-step into Ohio’s web application

If you can’t decide which filing option is right for you, view a comparison of the different filing options (please note that TeleFile is not available for direct shippers). If you have any questions about the requirement, please visit Ohio’s Department of Taxation website, or call the Ohio DOT at 800-282-1784.