This year, if you ship to all available states, you will need to submit a total of 556 state reports—70 of these in January alone. On top of monthly shipping and tax reports, quarterly and annual reports come due in January to significantly increase your reporting workload in the first month of the year.
The amount of data required, in addition to the overall quantity of reports due, can present a daunting challenge for even the most organized compliance professionals. For example, some states require annual direct shipper returns, which require detailed listings of each invoice shipped over the entire year and can be 15 pages or longer— depending on shipment volume.
Help set yourself up to breeze through the hectic January reporting period with these three simple, but important, steps:
Step 1: Review 2010 changes in state reporting requirements
As simple as it sounds, the first thing you want to do is to take some time to make sure you understand reporting requirements for each state that you ship to. Of the 38 states that allow direct shipping, some states require monthly, quarterly or annual reports, while others do not. And as more states are moving towards electronic filing, you are responsible for knowing if you must file electronically and the correct process to do so.
If you ship to Washington state, you can opt to e-file if you pay less than $4800 in taxes each year. If your taxes exceed $4800 annually, however, you are required to use e-file and e-pay to file monthly reports. Wisconsin, Ohio, and California and offer e-filing. If you plan to file any reports electronically, check the states’ websites to set up your online account and to review acceptable file formats and payment requirements.
Iowa opened for direct shipping as a permit state in July 2010. Wineries that ship to Iowa are now required to have a direct-shipping license and to report excise tax monthly.
If you are uncertain about any reporting requirements, now is the time to contact the states with your questions. The closer we get to year-end reporting season, the harder it will be to get your questions answered in a timely manner as the states get inundated with calls.
Step 2: Familiarize yourself with your reports
After you know which reports you need to submit, take some time to review them and to know what each report entails; not all direct shipping or tax reports are alike. Do you know which monthly, quarterly and annual state reports require you submit purchaser and/or recipient date of birth, carrier information, or tracking numbers?
Do you know which reports are based on payment date versus actual ship date? This concept itself can be confusing if you are unfamiliar with accounting methods. For example, direct shipping reports often ask you to report the invoice date, or purchase date, of the order, but you are required to include orders based on the date when the order actually shipped (the date that it was picked up by the common carrier).
Review your reports carefully to make sure you understand what each one requires.
Step 3: Gather all required data
Once you know what each report requires, you are all set to start organizing your data. Start early to have everything in place before January, and you will save yourself the headache and hassle of trying to find this information in the midst of the year-end reporting frenzy.
Date of birth: Wisconsin and Maui County require direct shippers to report both purchaser and recipient date of birth on direct shipping reports.
Label: The New York Wine Manufacturer’s Report includes a field for the TTB ID for each wine product shipped into the state. This is a unique ID assigned by the Alcohol and Tobacco Tax and Trade Bureau when you register for a Certificate of Label Approval.
Carrier/tracking information: Virginia and New York require that you specify the common carrier for all orders shipped to their residents, and Missouri’s Form 12 and Form 40 Direct Shipper Annual Report and Tax Computation require tracking numbers for all shipped orders. If you do not currently have your tracking numbers, contact your shipping department or fulfillment provider to get this information lined up.
Summary reports: Michigan and Hawaii’s annual sales reports and North Carolina’s quarterly sales and excise reports are summary reports on which you will need to list the amount of tax you paid in prior months.
Going through the three above steps will help eliminate unnecessary hassle and headache from your year-end reporting workload and can help make your reporting workflows more efficient overall when completed on an ongoing basis.
If you are a ShipCompliant user, these steps will be automatically completed for you, eliminating 90% of your year-end reporting workload! If you already have a ShipCompliant account, register for the December 16th Year-End Reporting webinar to learn detailed information, specific account settings and steps you can implement to further streamline your year-end reporting.
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