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.
Maryland may still be working out some kinks in the sales tax collection component of their direct wine shippers program. Some wineries may have incorrectly received a notice that their sales tax payments should be made monthly rather than making the quarterly payments required under the DTC shipping law.
It seems that some vendors are being automatically switched to monthly payments in the state’s automated collection system. If you receive a Maryland Sales & Use delinquency/penalty letter telling you to file monthly reports, do not follow their instructions and change from quarterly payments. Instead, contact Patricia Anthony in the Licensing & Registration Division at (410) 260-7532. And do NOT contact the Sales & Use Division as the letter might suggest.
Terri Cofer Beirne, Eastern Counsel, Wine Institute
Alcohol Tax Filers who pay Georgia Excise Tax or related Georgia license fees will be required to file and renew online beginning September 2012 through the Georgia Tax Center (GTC). The Georgia Department of Revenue (GDOR) has sent out a notice stating that businesses can begin managing their alcohol tax account with the GTC and access the new e-file templates starting September 4, 2012, in time to file August 2012 monthly tax returns.
Affected alcohol returns include, but are not limited to:
- Georgia ATT-7SP Excise Tax Return
- Georgia ATT-11 Monthly Report of Distilled Spirits Shipments to Wholesalers
- Georgia ATT-112 Report of Wine Shipments
The state sent out a second notice this week containing instructions on how to create a GTC login or add a license account to an existing login. Also noteworthy, those intending to renew their alcohol-related licenses will be expected to do so through their new GTC online account for the renewal period beginning September 4, 2012 and ending November 1, 2012.
Georgia’s announcement to go paperless joins the ranks of other online state filing systems such as Wisconsin and Ohio.
Washington now allows an optional annual filing of wine tax for wineries whose total sales into Washington are less than 6,000 gallons annually (roughly 2,500 cases). Wineries that exceed the 6,000 gallon limit, however, must continue to file monthly returns. This new allowance comes after the passage of SB 5259, a bill that passed in March and officially came into effect in June of this year. Bright yellow postcards were recently sent out by the Liquor Control Board (LCB) to qualifying wineries, along with instructions on how to change to the new frequency.
Senate and House Bill Reports on SB 5259 state that the passage of the bill is expected to benefit an estimated 300-400 wineries, simplify the reporting process and save time and effort. The state will benefit as well, as processing returns and payments for small dollar amounts can prove costly for the state.
How to Notify the State
Wineries who file the LIQ-774 (in-state wineries) and holders of the Certificate of Approval (COA) who file the LIQ-778 or the LIQ-870 (direct wine shippers) expecting to sell less than 6,000 gallons in Washington this year can sign up to file annually for the remainder of 2012 by emailing email@example.com. July 20 is the deadline for notifying the Liquor Board of intention to file annually for the remainder of the 2012 calendar year, so wineries should submit their requests to the LCB as soon as possible. In this email, specific account information should be included:
- Name and phone number of the individual who files the returns
- Trade name of the winery
- COA number (or winery license number for in-state wineries)
- Whether or not June 2012 sales have already been filed
The annual report for the remainder of 2012 may include sales from June through December. However, wineries that have already filed for the month of June will file the annual report beginning with July’s sales. If wineries would prefer to file annually beginning in January, this same process can be followed to change the filing frequency before the beginning of each new year.
Questions? Please contact the Washington State Liquor Control Board directly, or comment below.
Texas recently sent an updated Direct Shipper’s Report (form C-240) along with a letter to Out-of-State Winery Direct Shippers, alerting the licensees of a change in the tax rate to be paid on wine sent to Texas residents from out-of-state. Until now, Texas has only required out-of-state direct shippers to pay $0.204 per gallon on all wine shipped. The taxes on vinous liquors listed on the revised form are equal to the taxes paid by in-state wineries and are as follows:
- Wine with an ABV of 14% or less – $0.204/gallon
- Wine with an ABV over 14% – $0.408/gallon
- Sparkling wine – $0.516/gallon
The updated rates are in effect for the current quarter (December – February), and the next payment is due on March 15th.
Texas Form C-240
The Maryland Comptroller’s office released its Direct Shipper Excise Tax Return form Tuesday. This is the form that licensed direct shippers submit quarterly to pay their state excise taxes and report their shipments to consumers in the state.
IMPORTANTLY, the Comptroller’s office has pushed back the deadline for direct shippers to submit their 3rd Quarter Report to November 1. The Report had been due on October 10th. However, because the Comptroller’s Office released the new form so late, they have extended the deadline to November 1. This extension of the deadline only applies to the Quarter 3, 2011 report. All subsequent reports will be due on the 10th of the month following the period. For example, the Quarter 4, 2011 report will be due on January 10th.
The report can be downloaded HERE: http://compnet.comp.state.md.us/Motor_Fuel__Alcohol_and_Tobacco_Tax/Alcohol_and_Tobacco_Tax/Static_Files/Alcohol_Tax/Forms/DWS%20315.pdf
ShipCompliant Clients: If you have subscribed to the Maryland Direct Shipping Report, the new form — all filled out and ready to print and send to the Comptroller’s office — will appear in your “Open Reports” inbox later today.
Not a ShipCompliant Client?: If you are shipping to Maryland, let us produce this report for you at no charge to give you an idea of the simplicity and efficiency that comes with using ShipCompliant. Just send us a spreadsheet and we’ll do the rest for free..
The state of Maryland opened to winery-to-consumer direct shipping on July 1, 2011, after a multi-year effort by the industry and consumers to change the Maryland law.