Wine direct shippers doing business in Connecticut will be required to report and pay sales tax due for all filing frequencies beginning on or after January 1, 2014. This mandate affects direct wine shippers because sales tax remittance is a requirement of their direct shipping license in Connecticut. Currently most shippers file both their sales tax and excise tax returns for Connecticut via paper. After January 1, 2014, however, only excise tax should be remitted via paper mailings. Specific details on this eFile mandate may be found in Informational Publication 2013(15), but below are a few notable details to get filers prepared for this change.
New e-filing sales tax filers have two options to file sales tax returns: via telephone at 860-289-4829, or via the TSC Online website. Taxpayers need their “Connecticut Tax Registration Number” and PIN or information from a previously filed return to log on to the TSC website. Both of these options allow for sales tax to be paid along with filing the return. Sales tax filers may remit payment via ACH debit (recommended), ACH credit (pre-registration required) or by a credit card (convenience fee assessed). For specific details on each of these payment options please refer to the publication noted above.
Any sales tax filer that would like to begin filing sales tax online now is allowed to do so; simply choose one of the above options to file and pay sales tax for the last tax return of 2013.
Monthly filings in 40+ states can be quite a burden, especially for suppliers who don’t have significant sales every month in every state. Idaho has recognized over the years that wine direct shippers generally do not have significant sales every month and is reaching out to licensed wine direct shippers letting them know they may be eligible to file the “Idaho Form 1752 Wine Wholesalers, Wineries and Wine Direct Shippers Tax Return” and/or the “Idaho Form 850 Sales and Use Tax Return” on a less frequent basis. This eligibility is dependent on requirements outlined in the Idaho Administrative Rules:
- Monthly tax filers liable for the Idaho wine or sales taxes who owe $600 or less per quarter and have a satisfactory record of timely filing/payment of their taxes may request to file quarterly or semi-annually.
- Monthly tax filers liable for the Idaho wine or sales taxes who have seasonal activities and have a satisfactory record of timely filing/payment of their taxes may request to file annually.
Any licensed wine direct shipper that files either or both of these returns on a monthly basis and falls under the criteria noted above may submit a request for a less frequent filing preference by sending an email to firstname.lastname@example.org or writing a letter to:
- Meaghan McCandlish
- Unit: RO/PAS
- Idaho State Tax Commission
- PO Box 76
- Boise, Idaho 83707-0076
You must receive confirmation of approval by the Idaho State Tax Commission before you may begin filing at a less frequent reporting frequency. Also, if you are approved to switch from monthly to quarterly in the next two months, the soonest you may begin filing quarterly would be for the quarter beginning January 2014 and you would still need to file a monthly reports for the last months of 2013.
Please note, wine suppliers that only sell to Idaho distributors and do not partake in any direct-to-consumer sales with Idaho do not need to submit Form 1752 to the State Tax Commission.
Effective October 1, 2013 Maine will increase the general sales tax rate from 5% to 5.5%. This state rate increase adds to the list of statewide tax changes seen this year, including but not limited to: California, Virginia, Ohio, Arkansas, and Tennessee (food only). Accompanying the rate change, filing for the tax period containing the rate change for semi-annual and annual filers will be unconventional.
Maine is requesting that semi-annual and annual filers submit returns on a ‘special’ frequency schedule to accommodate the transition from a 5% to a 5.5% tax rate. Semi-annual filers will need to submit two quarterly filings, July 1 through September 30 and October 1 through December 31 to reflect the old and new rates, then continue to file semi-annual per norm for 2014. Annual filers will need to submit one report to cover the time period of January 1 through September 30, then a quarterly filing for October 1 through December 31, then return to their annual filing per norm for 2014. Monthly and quarterly sales tax filers, however, should see no change to their filing frequency.
Maine has not had a state sales tax rate change since 2000, when the rate decreased from 5.5% to the soon-to-be replaced rate of 5%. Born out of the Maine budget bill, the coming rate increase is not permanent, and the additional 0.5% is set to expire June 30, 2015.
ShipCompliant account holders required to file any of the above special frequencies will find this automatically updated in their accounts.
Next week, our team will be in Napa to celebrate our 8th annual DIRECT Conference. If you’ll be in the area on June 13th, we’d love for you to attend!
But did you know that we’ll also be holding events in Oregon and Washington this month?
It’s easy to see why hundreds of brands in the Pac Northwest have begun to use ShipCompliant in the past few years; the region is now a formidable force in direct-to-consumer sales. When we compiled our 2013 Direct Shipping Report, we saw growth across the entire market, but Oregon and Washington stood out as outperformers. Though their direct wine sales are about one fifth of Napa’s, the upward trend is hard to ignore.
Let’s take a closer look at Washington.
According to our 2013 Direct Shipping Report, the Evergreen State has seen monumental growth in its wine industry, with year over year volume growth of more than 18% in 2012.Not only that, but the average price of a bottle from Washington has risen 19%. This has pushed the market past the $50 million mark for the first time last year, and is showing no signs of slowing down.
It also seems that the best food pairing for a glass of Washington Cabernet Sauvignon, is, in fact, another glass of Washington Cabernet Sauvignon. Sales of the varietal have shot up over 69% in the past year. Cabernets, Syrahs, and blends now represent 70% of the state’s market for wine by volume.
Heading south a bit, our friends in Oregon have also enjoyed huge success in recent years. The state boasted a 10% gain in direct shipping sales last year, and its average price per bottle has risen to over $37, slightly above that of both Washington and Sonoma.
The 2004 Paul Giamatti film “Sideways” was set in Santa Barbara, where the actor’s character was obsessed with Pinot Noir. Based on our data, the film could have easily been set in Oregon, where the varietal represents 60% of total shipping volume, as well as the highest average bottle price at $47. No other region is more dominated by a single type of wine than the Beaver State.
The source of Oregon’s rise in direct shipping, however, is not forged by Pinot alone. Now that Oregon has established itself as a haven for aspiring grapes, more varietals have stepped up to the plate, as Pinot Noir’s annual volume remains flat. Syrah/Shiraz, Sauvignon Blanc, and Cabernet Franc have all exploded in 2012 with growth of over 100% each. Meanwhile, Cabernet Sauvignon’s average price per bottle has risen 30%, to $35. Though these varietals have a long way to go to catch up to Pinot Noir, it’s this diversity that is truly fueling the state’s rapid ascent.
We welcome this growth, and we love to see it. In fact, we’re hosting two events in the Pacific Northwest this month, along with our sponsors, Moss Adams LLP. We call it “Step-by-Step,” and we’ve designed these seminars to help wineries finance, account for, and act compliantly through the rapid positive changes happening in their businesses.
To sign up for our June 18th seminar in Oregon, click here!
To sign up foro ur June 20th seminar in Washington, click here!
The ShipCompliant Blog brings you a steady flow of legislative updates, regulatory changes and other important news impacting wine shippers. If you find this information valuable, you won’t want to miss DIRECT 2013, ShipCompliant’s 8th annual Direct Sales and Shipping Seminar taking place June 13, 2013, in Napa, California.
This full-day seminar will feature multiple breakout sessions to discuss, in detail, some of the most important issues to wine direct shippers today, including:
- Regulatory Roulette: A Discussion of Key Regulatory Issues Impacting Your Business
- Integrating a Mobile Marketing Strategy into Your Sales Efforts
- Third-Party Marketing: The Regulatory Landscape You Need to Know
- Best Practices for Managing your Fulfillment Efforts in the Age of Amazon
- Shipping Analytics: How Do You Measure Up?
- ShipCompliant Support Lab: 1-on-1 Training
- ShipCompliant University (three tracks)
- Back to Basics: ShipCompliant 101
- Compliance Made Easy
- From Sale to Shipment
You’ll also get to hear from best-selling author and keynote speaker, Dr. Joseph Michelli, as he shares his share his extensive, in-depth research into key differentiators that define the success of companies like Starbucks, Zappos, and The Ritz-Carlton Hotel Company. And more importantly, how wineries can incorporate these strategies to create their own “creaveable” brands.
Wine Institute Director of State Relations, Steve Gross, will give a detailed state-by-state overview of recent and upcoming changes affecting wine direct shippers. Pat Kohler, Director of the Washington State Liquor Control Board, and Deputy Director Rick Garza will provide insight on recent changes in Washington state that have industry-wide impacts.
Seating is limited, so register today to confirm your seat at this eighth-annual exciting and informative conference.
In short, yes, for a couple of reasons:
1. Wineries already pay sales tax in most states
2. The vast majority of wineries will likely be exempt from the law
So what is it, exactly?
Senate Bill S. 743, more commonly known as the “Marketplace Fairness Act“, is a pretty simple bill that would give states the ability to require out of state businesses that have “remote sales” in excess of $1 million annually to remit sales taxes. Each state would be able to opt in to the Act, but only after they have simplified their tax structure, either by joining the Streamlined Sales and Use Tax Agreement or to follow the steps outlined in the bill to simplify their sales tax requirements.
Will it pass?
With broad bi-partisan support, S. 743 passed out of the Senate with a vote of 69 to 27. However, a tough battle is expected in the House, and therefore the Marketplace Fairness Act has a long way to go before it is enacted with a signature from President Obama. Amazon.com is supporting the bill (presumably because they would like to move forward with their plans to build warehouses in each state to support same-day shipping), while eBay is one of the main voices in opposition.
What will it mean for wineries?
A lot hinges on the definition of “remote sales”. Keep in mind the fact that state legislation to allow wine shipments typically includes a provision that also requires wineries to register for and pay sales tax. As it stands in the Senate version, and based on our interpretation of the current language, sales by wineries to states where they are already required to pay sales tax would not be counted when considering the $1 million threshold for remote sales.
Based on some quick analysis, there are a few hundred wineries in the US that ship more than $1 million worth of wine to consumers each year. BUT, if you include sales only to those states (Alaska, Colorado, D.C., Florida, Iowa, Kansas, Minnesota, Missouri, New Hampshire, Oregon, and Wyoming) that do not require wineries to pay sales tax, then we estimate that less than 25 wineries would exceed the $1 million cap. In other words, the vast majority of the 7,000+ wineries in the US would be exempt from this law.
Wineries are already accustomed to calculating, collecting, and remitting sales taxes in most states. So, for those wineries that would not be exempt from this law, it would probably not be that big of a deal to add a few more states (initially the states of Iowa, Kansas, Minnesota, and Wyoming) to the list of states to which they would be required to remit sales tax. They already have the technology and processes to do so.
The bill would take effect, at the earliest, on October 1st, 2013. Once effective, the 22 “Streamlined” sales tax states would begin requiring sales tax for remote sellers with over $1 million in sales. After that, each of the remaining 28 states would choose whether to opt in to the Act and start requiring sales tax from remote sellers.