On November 5, 2010, Idaho State Tax Commission officials sent out a letter to qualified wine tax return filers, offering the opportunity to change their filing frequency from the mandatory monthly submission to quarterly, semi-annually or annually. “Qualified Filers” include direct shippers who report less than $600 of wine tax per quarter (approximately 186 9-liter cases per month) and have a good filing history. Recipients of letters from the department, in order to change their filing cycle for the upcoming year, must respond to the letter by December 1, 2010. Filers should continue to submit monthly returns until after January 1, 2011 when the new filing frequencies will come into effect. The Idaho State Tax Commission encourages qualified filers to take advantage of this opportunity; submitting returns less frequently will mean filers no longer need to submit returns for negligible amounts of tax and will reduce the amount of required paperwork.
Note: ShipCompliant users will see the new frequency options available on the Report Settings page at the end of December.
Governor Parkinson of Kansas signed SB 452 into law, changing the license term for a Special Order Shipping License from one year to two years. The legislation became effective on July 1, 2010. The fee for a new Special Order Shipping License was adjusted to $150 to reflect the new two-year license term. Current holders of a Special Order Shipping License are now required to renew their license for a period of two years and pay a $110 fee. Wineries applying for a new license have two options. Option 1) Pay the two year license fee in full. Option 2) Pay half of the license fee plus the registration fee with their application and pay the remaining half of the license fee plus a 10% surcharge within one year of the date the license was issued. It should be noted that a failure to pay the remaining license fee and 10% surcharge by the due date will result in the automatic cancellation of the 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
New Mexico Stands Alone
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!
Effective July 1, 2010, the filing and payment due date the Hawaii Gallonage Tax, will change from the last day of the month to the 20th day of the month. Wineries shipping to consumers in Hawaii are required to file a “Combined Monthly Return of Liquor Tax and Report of Wine Gallons and Dollar Volume of Taxable Sales” (Form M-18) and pay gallonage tax to Hawaii’s Department of Taxation each month. Please see the document, “Announcement No. 2010-02,” issued by the Department of Taxation for additional information about changes to the payment of taxes in Hawaii.
By Annie Bones, State Relations – Wine Institute
The New Hampshire Liquor Commission has just established a new fax line dedicated to direct shipping. Direct Shippers should fax their monthly report to the new fax number 603-271-8424 on or before the 10th of the following month. Direct Shipping Reports must be filed each month regardless of activity. Wineries with no shipments to report are encouraged to email their reports as attachments to email@example.com instead sending via fax. The Direct Shipping Monthly Report form has been updated with the new fax number and is posted on the Wine Institute website. Should you have any questions please contact Annie Bones, Wine Institute’s State Relations Coordinator, at 415-356-7530 or firstname.lastname@example.org.
by Annie Bones, State Relations – Wine Institute
Wine Institute Eastern Counsel Terri Beirne has been working since July 2009 with the Virginia ABC Board, and representatives of Wine America and the Virginia wineries to resolve problems created by Virginia ABC Circular Letter 09-05. That Circular prohibited Virginia direct wine shippers from using any third-party service providers, namely fulfillment or pick and pack warehouses. To resolve this problem, Wine Institute drafted legislation and identified sponsors in the 2010 General Assembly to permit a third party, under the direction and control of a Virginia wine shipper license, to solicit and receive orders for wine, and to pack and ship wine.
Like sausage, the bill that started in Virginia was quite different from what passed. Most importantly, the new law allows wine shipments into Virginia from out-of-state shipper licensee through an “approved fulfillment warehouse.” The ABC is charged with developing regulations governing such approval. They will require the fulfillment warehouse to: 1) show ABC its home state license; 2) to maintain/give records that the ABC will describe; and (3) demonstrate it has a contract with a wine shipper licensee designating that fulfillment warehouse as its agent. Wine Institute will actively participate in the creation of these regulations, but it is unlikely they will be finalized before July of 2011.
The new law also creates a Virginia fulfillment warehouse license, as well as a Virginia “marketing portal” license. These two new licenses are available only to agricultural cooperatives (non-profit associations recognized by the Virginia Agricultural Cooperative Act of 5 or more growers within Virginia) operating under the direction and control of a Virginia wine shipper licensee. On behalf of wine shipper licensees, the fulfillment and marketing portal licensees can pack and ship wine for wineries/retailers, or solicit and receive orders for wine through an Internet site.
Virginia continues to permit wineries licensed as Virginia direct wine shippers to offer their wines to Virginians via their web sites. It also continues to allow retailers licensed as Virginia direct shippers to market their own inventory on a web site. However, the new law prohibits any marketing on web sites of wine not owned/possessed by the web site owner, unless done by a Virginia agricultural cooperative licensed as a marketing portal.
Unfortunately, the new law (resulting from HB 279, HB 630, SB 483 and SB 590) also raises the annual license tax for Virginia wine shipper licensees from $65 to $95. It will take effect on July 1, 2010, at which time Virginia ABC will begin to draft the regulations.
-Terri Cofer Beirne, Eastern Counsel, Wine Institute