Update 10/22/2013: FedEx will halt shipments to North Dakota effective immediately. Official statement from FedEx below.
This communication is to confirm that FedEx Express, FedEx Ground and FedEx Home Delivery will cease transporting alcoholic beverages destined to an address in North Dakota effective immediately. FedEx has been unable to arrive at a solution that would allow compliance with the new law while protecting our customers’ shipping experience.
Despite their previous notices to wineries that FedEx will stop shipping to North Dakota consumers effective 11/1, FedEx will continue to ship while they are in discussions with state officials on the new requirements. Official statement from FedEx below:
“As of today, October 17th, 2013 FedEx and officials from the State of North Dakota are in continuing discussions about keeping the state open for shipments by licensed DTC shippers. We have been informed, that for the time being, those holding the required permits will be allowed to continue to process shipments via FedEx into the state past the previously announced stop date of November 1, 2013.”
FedEx will stop shipping wine to North Dakota, effective November 1st. Please see below for a statement from FedEx sent to Wine Institute members.
Due to recent changes in North Dakota law, FedEx Express, FedEx Ground and FedEx Home Delivery will cease transporting shipments containing alcoholic beverages to and within the state of North Dakota, Effective November 1st, 2013. After that date, packages containing alcoholic beverages destined for a North Dakota address will be Returned to Shipper. We will provide further information to members in the event of future changes.”
ShipCompliant Direct users will see a “Carrier Prohibited” rule in their account effective on November 1st. This will result in a failed compliance check for any shipments with a FedEx carrier service code destined for North Dakota consumers.
To learn more about the recent changes in North Dakota, as well as new laws in Montana, Nebraska, and Arkansas, please attend our free Direct Sales Virtual Seminar on Thursday, October 17th at 10:00 PT.
It’s been just over a month since North Dakota implemented SB 2147, and the state has been busy processing applications for the new “Alcohol Carrier” and “Logistics Shipper” licenses required under new law. Shortly after SB 2147 became effective, both UPS and FedEx were approved carrier licensees, and as of today, seven fulfillment logistics companies have been approved as “Logistics Shipper” Licensees. These seven include: Alexander Valley Cellars, Napa Valley Wine Warehouse, Vinfillment, Vin-Go, Wine Service Co-op (WSC), WineDirect, and Wine Shipping. Approved Carriers and Shippers may not have received a physical license yet, but do not need to wait to begin shipping. Physical licenses are expected to arrive in the mail soon.
Wineries and Retailers may check the North Dakota website for a list of approved North Dakota Carriers and Logistics Shippers located here under the link titled “List of Alcohol Licensees”, but keep in mind, the list is not updated on a daily basis.
Following North Dakota’s implementation of SB 2147 last week, which is explained in detail here, North Dakota announced that alcohol carriers FedEx and UPS have submitted applications and are now approved for shipping direct-to-consumer orders into North Dakota through the end of the year. SB 2147 updated the existing direct shipping law with the requirement that alcohol carrier and fulfillment logistics companies get “Alcohol Carrier” and “Logistics Shipper” licenses, respectively, in order for wine direct shippers to use their services for shipments to North Dakota consumers. FedEx and UPS therefore may now be used for wine direct shipping by North Dakota licensees who ship from their licensed premesis.
Wineries and Retailers licensed to sell and ship to North Dakota consumers should remember, however, that until logistics shippers (aka fulfillment warehouses) are licensed under SB 2147 requirements, only in-house fulfilled orders can be shipped. North Dakota periodically publishes a list of licensed entities on their website located here under the link title “List of Alcohol Licenses”.
FedEx will halt shipments effective November 1st, 2013. Please see this post for more information.
An update to North Dakota’s existing direct shipping law is going into effect today, August 1. Passed earlier this year, the new law maintains much of the existing law surrounding direct shipping, but also adds two new licenses, “Logistics Shipper License” and “Alcohol Carrier License”, in addition to new shipment reports.
Since April of 2010, fulfillment warehouses have been prohibited from shipping into the state on behalf of their winery or retailer clients. Effective today, a fulfillment warehouse can ship into the state once they apply and are approved for a “Logistics Shippers” license. Also effective today, an “Alcohol Carrier” license is required for any carriers shipping direct-to-consumer orders into the state; this includes common carriers such as FedEx and UPS. According to a recent newsletter sent out by North Dakota’s Office of the State Tax Commission,
“All direct shippers, logistics shippers, and alcohol carriers MUST be licensed BEFORE shipping… and must ensure the alcohol beverage is being shipped and delivered by licensed direct shippers, licensed logistics shippers and licensed alcohol carriers.”
No Logistics Shipper or Alcohol Carrier licenses have been issued as of yet. This means that, in effect, until carriers become licensed, direct shipments into North Dakota will not be compliant. Alcohol Carrier and Logistics Shipper licenses may take a week to be processed.
Licensees should also be aware of new shipment reports. The law now requires each of the three aforementioned types of licensees to electronically report shipments into the state. Each licensee must keep records and will be required to report the name and license number of the other licensees they used for each shipment. All licensees will be required to report the name and address of the recipient, the type and quantity of alcohol shipped, and tracking numbers. Direct shippers may file the existing annual electronic report for all 2013 shipments (“Schedule H” for sales of liquor and wine); the new direct shipper reporting requirements will go into effect beginning with the 2014 filing period. Alcohol Carriers and Logistics Shippers must report monthly. To ease the reporting burden, the Office of State Tax Commissioner publishes license names, numbers and addresses of licensees on their website.
ShipCompliant clients should note that we added “Carrier Prohibited” rules for FedEx and UPS to our database that will cause all shipments to North Dakota to be not compliant effective today. Once we receive confirmation that the carriers are licensed, we will remove each rule to allow shipments from approved Alcohol Carriers. Similarly, we applied a “Third Party Shipper Approval Required” rule to North Dakota that will cause shipments from non-approved fulfillment houses to fail compliance checks. Currently, no fulfillment houses are approved, but we will update this rule immediately after getting confirmation of each approved Logistics Shipper.
Alcohol Carrier License Application
Logistics Shipper License Application
Direct Shipping Permit Application
- $50/year Renewals will be sent out in November for the 2014 licensing period
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.