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.
Starting with the October filing period, Indiana requires all alcohol beverage companies working in Indiana to electronically remit monthly excise tax returns and shipment reports. This method for electronic filing and payment is unique to Indiana and does not exist in any other state report.
ShipCompliant will be holding several webinars over the coming weeks to help you navigate these new requirements.
Click here to attend a webinar or sign up for a consultation.
The new Indiana report will be filed automatically for ShipCompliant AutoFile users. All other filers can use the summarized actions below to meet the new Indiana requirements.
Step 1: Register with Indiana’s Excise Tax and Bulk Filing Departments
- Send an email request to Excisetax@dor.in.gov with your FID/FEIN, to obtain your new Alcohol Beverage TID#
- To register with Indiana’s Bulk Filing Department, send an email request to email@example.com for a certificate of registration.
Step 2: Download and install the following software needed to E-File
Step 3: Generate two test .xml files and send to Indiana via the above noted software programs
Step 4: Set-up electronic payments
- Electronic Payment set-up is required for those liable for paying taxes, such as wine direct shippers
- Register for electronic payment at www.in.gov/dor/3976.htm
Submit a test payment of $0.01 to PNC Bank
If you want the full set of instructions on Indiana electronic filing start by visiting the Indiana Department of Revenue FAQ page, or contact the department via the information provided on the FAQ page for more info.
And if this all too much for you to complete by the November due date (during one of the busiest times in the year), have no fear. If you are unable to successfully submit your report through this new bulk-filing process in November, Indiana will accept a paper version of the report for this month only.
Want to avoid the hassle of reporting to Indiana altogether? Sign up for ShipCompliant AutoFile and let us worry about completing the above steps for you. Learn more about AutoFile today!
No one disputes that applying new technology to the process of complying with state liquor regulations is long overdue. However, the new eFile requirements for Indiana excise taxes and shipping reports demonstrates that instituting new digital processes can be challenging.
The New Law
Beginning with the October filings (due in November), Indiana will require alcohol excise taxes to file reports and submit tax payments electronically. This applies to Direct-To-Consumer as well as wholesale reporting.
- If you are reporting more than 50 transactions in a reporting period, you must do so via XML file format. If you are reporting less than 50 transactions, you can request to enter each transaction via the Indiana Department of Revenue transaction-by-transaction data entry.
- Form 726 is now ALC-DWS: Direct Wine Seller’s Excise Tax Return
- Forms ABP1-B and ABP1-WLare now ALC-PS: Primary Source Suppliers Monthly Report
- Beginning August 15, 2014, taxpayers must register with INtax and have a 10-digit tax identification (TID) number with a three digit location. You will not need to reregister if you already have a TID.
- Taxpayers must send PGP-encrypted files when filing.
- In order to eFile, taxpayers must successfully upload at least two test files without errors. Once two files have been uploaded taxpayers will be able to perform a bulk file upload.
- More details available on Indiana’s website.
- ShipCompliant clients will have their tax payments calculated and reports generated in the appropriate XML format. Test uploads will also be available.
AutoFile and the ShipCompliant Fix
If this all sounds somewhat complicated, then you have correctly understood the implications of the new eFiling process in Indiana. AutoFile is a great solution for those wineries who would like to have the new reporting process handled automatically. AutoFile will handle all of the testing, encryption, and file transfer requirements on behalf of subscribers, with robust accounting tools and visibility into reports and payments. While we applaud the state of Indiana for updating their reporting process for a digital age, ShipCompliant’s mission is to ease the burden of compliance for all of our clients. In this case, the best way to do just that is to sign up for AutoFile. Plus, your first month of reporting is on us!
Effective Monday, June 16, 2014, New Mexico went live with their TAP online filing system for Combined Reporting System (CRS) returns. Taxpayers who file the CRS return, regardless of if they currently file paper or electronically, will need to take action to create an account with the new system if they wish to file online. Filers that currently file this return online using the old NM E-Filing Services system please note: your current login and account set up in the older system will not transfer over to the new TAP system; you must register for a new account.
What you need to know about this changeover:
- If you file by paper for the CRS Return:
- No action is required, you can continue to file by paper. If you’d like to begin filing online, follow the steps outlined below to get set up with an account. Some tax accounts are required to file online; review this Tax Professionals page for more information.
- If you efile your CRS Return and have not yet filed for the current reporting period:
- You must create a TAP account and file this return before July 25, 2014; you will not be able to file using the old system.
To register for a New Mexico TAP account:
- Go to the New Mexico TAP Website and “Sign Up”
- Follow the prompts requested by the site; make sure you have:
- A valid email address. Each TAP profile requires a unique email address.
- A valid federal ID number such as a Federal Employer Identification Number (FEIN) or Social Security Number (SSN)
- Letter ID from correspondence mailed to you within the last 90 days; or Information pertaining to the business account you wish to sign up for
Questions? Comments? We’d love to hear from you! We are always available at Support@ShipCompliant.com or you can call us during the week at (303) 996-2356.
To our valued customers:
The US beverage alcohol industry has it tough. It is one of the most regulated industries in the United States, as well as one of the most fragmented. Our industry is full of thousands of small businesses and startups; Entrepreneurs following their passion and seeking to achieve their dream of building a business as a winery, brewery, distillery or importer.
Today, I’m proud to announce a major milestone in our effort to eliminate the complexity and cost of compliance for beverage alcohol companies: AutoFile – The first fully automated filing and payment solution for regulatory reporting.
No longer will you have to print paper, cut checks, or log into online filing systems. All of your state sales tax, excise tax, direct shipping and wholesale gallonage reports are automatically filed through AutoFile, complete with payment.
AutoFile has many benefits over reporting by hand, or outsourcing:
Simple funding: State payments are made out of an account of your choosing. No painful escrow accounts to manage, or reconciliation to deal with. It’s all under your own accounts!
Total control: Anytime, anywhere, view your compliance activity, place filings on hold, review past activity. Just like online banking you can view everything submitted on your behalf, in real time.
Future proof: If a state regulatory system changes its forms, procedures or methods, rest easy, it’s our problem now, not yours.
Guaranteed: All regulatory filings will be sent on time and accurately, guaranteed.
I encourage you to try it today, using our special free trial offer:
Your first month of reporting is on us, plus we’ll waive your setup fees.
Customers: Click here to start your free trial!
Non-customers: Choose an edition of ShipCompliant right for you.
We are grateful to our many clients that assisted in creating a solution that will help our industry grow further and faster.
In May of 2012, Governor Jan Brewer established the Transaction Privilege Tax Simplification Task Force in order to identify ways the current complex sales tax code could be simplified in the hopes of reducing tax filer stress and increasing tax-filer compliance. The conclusions of this task force, available in full in the Final Report, led to the creation and subsequent passage of HB 2111. HB 2111, which goes into effect January 1, 2015, calls for all licensing and taxes to be paid and reported through a single online portal.
This change, outlined in more detail in Section 42-5015 of the bill, will be an especially welcomed change to how Transaction Privilege Taxes (TPT) are reported. Currently cities are split between 73 “program” cities, where the state collects the tax, and 18 “non-program” cities, where cities are responsible for collecting the tax. For licensed wine direct shippers who remit applicable taxes to several locations, this can result in an overwhelming set of tax filing requirements. The state will release more information regarding the new online platform throughout 2014. ShipCompliant clients should stay tuned for announcements that will further outline the changes as well as subsequent updates that will ease the transition in their account to the new “one-stop-shop” process. All updates to clients will take place well in advance of the January 1, 2015 effective date.
The TPT simplification process has been pushed back until 2016, and therefore the majority of non-program cities will continue to handle their own licensing and taxes for the 2015 year. The following cities, however, will become program cities effective January 1, 2015:
- Bullhead City
For further information please refer to the state’s TPT Simplification Update page.