Posts from the Wine Institute Category
Illinois Offers a Bit of Green for Direct Wine Shippers
July 2nd, 2008
For those of you that have started shipping to Illinois under their new permit system, your first round of reporting will come due this month. Fortunately, Illinois makes it easy to report your shipments and pay taxes. Electronic filing and payment is available for the Liquor Direct Wine Shipper Return (RL-26-W), and the Sales and Use Tax Return (ST-1). As we discussed in an earlier post, electronic filing is better for the environment, and it saves you printing and mailing costs; that’s two shades of green!
Before you begin the process for Illinois electronic filing, you will need your Illinois Business Tax number (IBT), your PIN, your payment information, and you will of course need to know how much tax you owe. You should have received your PIN when you registered with the Illinois Department of Revenue. If you have not received your PIN, or do not know what it is, you can contact the Department of Revenue at 217-782-6045, and they will provide you with your PIN.
To start electronic filing for the ST-1, click here, and then click “start filing.” To begin electronic filing for the RL-26-W, click here, then click, “Start Using Webfile.” You can save progress and view submitted reports up to a year after submission.
Half-Year Hullabaloo: New Laws Take Effect in Three States Today
July 1st, 2008
Just a quick reminder of the legislative changes that take effect today, July 1st, 2008.
- Georgia’s new permit system takes effect. All wineries can now apply for a permit, regardless of distributor representation. Click here to see how to apply for a direct shipping permit.
- Ohio is increasing their capacity cap, making it possible for wineries that produce under 250,000 gallons annually to apply for a direct shipping permit.
- Washington is implementing a destination-based sales tax for all in-state entities.
South Carolina: Timing is Everything
June 30th, 2008
Expensive permit fees deter many wineries from shipping to South Carolina, but with a little timing, shipping there can make more sense.
For those who already have a South Carolina Out-of-State Wine Shipper’s License, the license must be renewed at the end of August if you wish to continue shipping to the state. The license fee is a costly $600 every even year and is not pro-rated for applications after the start of the fee period. The next fee period begins August 31, 2008, after which the direct shipping license will be valid and no fees owed through August 2010. Therefore, for those wineries that would like to begin shipping to South Carolina should take note of the fee period timing because the license, if applied for now, would be $600 for two months.
Unfortunately, there are a few more costs associated with direct shipments to South Carolina. In order to apply for an Out-of-State Wine Shipper’s License, applicants must first complete the Business Tax Application form SCTC-111 ($50 fee) and the Certificate of Registration form ABL-500 ($400 biennial fee). The completed Certificate of Registration form must be attached to and sent in with the Out-of-State Wine Shipper’s License Application form ABL-571 ($600 biennial fee). Contact Joyce at the South Carolina Department of Revenue with any questions at 803-898-5864.
TTB Expo 2008
June 17th, 2008
The ShipCompliant research team is attending the first annual TTB Expo at the Northern Kentucky Convention Center, just outside of Cincinnati, today and tomorrow. The turnout here is quite impressive. In the opening remarks, the TTB team said their original goal was to get about 300 attendees from across the country. They had over 650 pre-register, and it seems like the actual attendance today is more like 1,000.
The turnout from the wine industry is equally impressive. We’ve run into a number of friends and partners in the industry from across the country today.
John J. Manfreda, Administrator of the Alcohol and Tobacco Tax and Trade Bureau (TTB), gave an excellent keynote address this morning, stressing an open dialog between the TTB and key industry stakeholders. They seem genuinely committed to listening to the industry to improve the ease of compliance with TTB regulations. If you have any questions or topics that you would like to get answers to while we are here, please feel free to leave a comment on this post or to drop us a private email at blog (at) shipcompliant (dot) com.
Family Winemakers of California Making Headway in Massachusetts
June 15th, 2008
On May 29, 2008, Family Winemakers of California filed a motion for summary judgment in Family Winemakers of California v. Jenkins, now before the federal district court for Massachusetts. The suit alleges that section 19F, the Massachusetts law that permits direct-to-consumer wine shipping, is unconstitutional because it “unequivocally discriminates against interstate commerce in both purpose and effect” by limiting direct shipment privileges to wineries annually producing no more than 30,000 gallons. The motion asks the court to declare that discrimination unconstitutional and requests that the court allow section 19F to remain in force, but enjoin Commonwealth of Massachusetts officials from applying the volume cap.
Section 19F was modified to replace a prior Massachusetts local-only direct shipping law, which was found facially discriminatory and invalidated in Stonington Vineyards, Inc. v. Jenkins. The current motion argues that the new text in section 19F was simply a more subtle means to accomplish the same protectionist ends. The bill that amended 19F was vetoed by Governor Romney, who declared that the measure would not cure the previous law’s deficiencies. The Massachusetts legislature, however, overrode his veto and signed the bill into law, setting the stage for judicial determination of which side was right.
Section 19F as amended creates a two-classification system based on the size of the winery’s annual production and wholesaler relationship. Section 19F(a) presents a choice for wineries producing more than 30,000 gallons annually –in effect, they can ship directly to consumers or have wholesaler representation. Wineries producing no more than 30,000 gallons annually can ship directly to consumers while also maintaining a relationship with a wholesaler.
Family Winemakers of California’s summary judgment motion alleges that the “large” wineries are primarily out-of-state and that section 19F, though facially neutral on location, is in intent and effect protectionist and discriminatory. Moreover, the law specifically dictates that fruit wine does not count toward the gallonage cap; the motion argues that a much larger portion of wine produced in Massachusetts is fruit wine than wine produced elsewhere, enhancing the discriminatory effect.
Unsurprisingly, Massachusetts has filed a cross-motion for summary judgment in response, arguing that section 19F is facially-neutral, not discriminatory, and less restrictive than similar laws in other states that have been upheld. The Commonwealth’s motion requests that the court join the courts in Maine, Kentucky, and Arizona which have left production caps in effect in their respective states. An amicus brief filed by the Wine & Spirits Wholesalers of Massachusetts also supports the 30,000-gallon production cap. A key problem with challenges in other states has been the lack of economic evidence supporting discriminatory effects; the current motion attempts to bypass that requirement, in part on the grounds that the previous flat ban on out-of-state direct shipment prevented compilation of economic evidence, excusing the plaintiff from a burden of proof it could not meet because of the defendants’ unlawful conduct.
Oral argument is scheduled for July 29, 2008. If the court determines that a genuine issue of material fact does not exist as outlined in either of the individual motions, the court will grant the motion of the party whose legal argument It finds persuasive. However, the court could deny both motions and rule that evidence is required to resolve issues of fact.
If the court grants the plaintiff’s motion, the resulting injunction enjoining Massachusetts from enforcing the capacity cap and the wholesaler relationship restriction of 19F would, in theory, open the state to shipments from out-of-state wineries. However, obstacles to direct shipments into the state might persist. For example, the decision would not directly affect current carrier policies; FedEx and UPS could continue to refuse to ship to Massachusetts. In addition, an injunction might not resolve issues apart from the volume cap, such as how individual importation limits would be enforced by state officials.
Whatever its outcome, Family Winemakers of California v. Jenkins will serve as an important precedent on the constitutionality of capacity caps. In particular, a plaintiff’s victory on summary judgment would significantly lower the evidentiary bar for challenges to thinly-veiled protectionist measures presented as facially neutral.
Washington: Making Change, Streamlined Style
June 13th, 2008
On July 1st, 2008, when Substitute Senate Bill 5089 takes effect, Washington will join twenty-one other states that have conformed to the “Streamlined Sales and Use Tax Agreement”. The bill will change the way retail sales tax is collected for some Washington businesses. Beginning July 1st, 2008, any business with nexus in Washington must pay sales tax based on the destination of the shipped order. Previously, Washington businesses that shipped orders to Washington residents could pay sales tax based on where the order was originating from, making local taxes fairly easy to calculate.
The new taxing regulation requires Washington wineries to pay local taxes to every destination to which they ship (via a single sales/use tax return). This could be a bit of a jolt for Washington wineries. With over 300 different tax rates and location codes, based on special districts that cannot be defined solely by city and county designations, filling out the periodic tax return could become significantly more difficult.
Out-of state wineries will see no changes in their tax payments. Destination-based sales tax in Washington should be nothing new for them; out-of-state wineries have had to pay destination-based sales tax since July 1st, 2006, when the Wine Shipper’s License first became available.
If you are a Washington business that ships or delivers goods, be sure to check the Washington DOR’s website for useful information about the change. On this page, you can use a number of different tax lookup tools as well as watch online tutorials.
Arizona Clarifies On-Site Shipping Law
June 4th, 2008
Following our May 6th submission, Wine Institute received further clarification from the Arizona Department of Liquor Licenses & Control regarding their continuing interpretation of the on-site sales law. Wineries may ship up to 2 cases of wine per Arizona consumer per calendar year as long as the consumer purchases the wine while physically visiting the winery. The wine paid-for by the consumer may then be shipped at anytime during the year to a residential or business address. The purchased wine may be broken down into multiple shipments during the year. No off-site orders are permitted at any time except by wineries holding a direct-to-consumer permit*. If Arizona consumers wish to have additional wine shipped to themselves in subsequent calendar years, they will need to physically visit the winery each and every year. There continues to be no reporting, tax or permit requirements under the “on-site shipping law.”
*The rules and requirements for wineries producing up to 20,000 gallons of wine in a calendar year with an approved direct-to-consumer permit/self-distribution license are different. Please visit the Wine Institute website for additional information about shipping to Arizona or contact Annie Bones, State Relations Coordinator, Wine Institute at 415-356-7530 or abones@wineinsittute.org.
Annie Bones, State Relations – Wine Institute
City Tax in Arizona: Get with the Program… and the Non-Program
June 2nd, 2008
Just as a state can create their own alcoholic beverage regulations, so can they implement their own, distinct, taxing regulations. Arizona has recently clarified their sales tax requirements, applicable to wineries licensed to sell offsite sales of wine directly to Arizona consumers.
According to the Arizona Department of Revenue, sales tax (called, “transaction privilege or use” tax) must be remitted on a local basis. This is the way Arizona tax has been handled since Arizona first became available to direct shippers in September of 2006; tax rates are based on the destination of the order. Most cities in Arizona have the State Department of Revenue collect their taxes for them. However, there are thirteen cities within Arizona that collect their own taxes. These cities are commonly referred to as “Non-Program” Cities. Non-Program Cities collect their own taxes independently from the State. This means direct wine shippers are required to register with all of the thirteen Non-Program cities that they ship to, individually, and remit separate sales tax returns to each of the cites they are registered with.
What does this mean to you? If you are licensed to sell wine directly to consumers in Arizona, you must contact each of the Non-Program cities directly in order to register to collect and remit sales tax with each Non-Program city (this is in addition to becoming licensed to pay County and “Program-City” tax with the state of Arizona). Only wineries that produce less than 20,000 gallons per year can currently become licensed to ship wine directly to consumers in Arizona via the Out-of-State Domestic Farm Winery permit. Wineries that produce more than 20,000 gallons and wineries without a permit can ship onsite sales to Arizona without a permit. In this scenario, wineries are not required to remit sales tax.
The thirteen Non-Program cities are: Apache Junction, Avondale, Chandler, Flagstaff, Glendale, Mesa, Nogales, Peoria, Phoenix, Prescott, Scottsdale, Tempe, and Tucson. A sales tax license usually costs around $50 per city annually, in addition to an application fee, which can range from $0 to $25.
10 Days Left Until Illinois Permit Deadline
May 22nd, 2008
Just a friendly reminder that beginning June 1st, 2008, Illinois will require a permit for all direct-to-consumer wine shipments to the state. A winery must receive the permit before it may begin/resume shipment to the state. In 10 days, under the newly-promulgated wine shipping law, wineries and retailers that have been shipping to Illinois under a reciprocal agreement will no longer be able to ship to the state without a permit. The Illinois Liquor Control Commission has not given any indication of a grace period for shipping while applications are in process.
For expedient processing, an applicant should submit a copy of its state liquor license along with the Out-of-State Winery Shipper’s License application. An applicant must also submit the brand registration form (for brands not already registered with the state) prior to, or simultaneously to the submission of the application. In addition, a winery must register for sales and excise tax. An accelerated tax permit approval process is available for those wineries which have a distributor in state. In any event, and with time running out, electronic submissions will be approved faster than those send via conventional mail. See our previous post for more detailed instructions and a checklist for the application process with links to forms.
Also, as a reminder, Georgia will open up on July 1st, and Wisconsin will begin their new permit system on October 1st. We’ll have the full details of the application process in both states as they become available.
Checklist and detailed instructions for Illinois permit applicants
May 14th, 2008
Beginning June 1, 2008 wineries will be required to have an “Out-of-State Winery Shipper’s License,” file reports, obtain a bond and pay sales and excise tax in order to ship wine to consumers in Illinois. Wineries with a valid Shipper’s License issued by the Illinois Liquor Control Commission will be permitted to ship up to 12 cases a year to a consumer who is 21 years of age or older, an increase over the 2 case annual limit in the reciprocity law being replaced. Illinois Direct-to-Consumer Permit applications are now available on the Wine Institute website.
Application for State of Illinois Winery Shipper’s License - Direct-to-Consumer Application
California wineries should select option F, “OUT-OF-STATE WINERY SHIPPER’S LICENSE” as type of license being applied for.
The application process separates wineries into 3 classes based on the total number of gallons manufactured annually. The cost of the annual license for each class varies. Class 1 wineries have a $150 license fee and produce less than 250,000 gallons annually. Class 2 consists of wineries producing more than 250,000 gallons but less than 500,000 gallons annually. The license fee for Class 2 is $500.00. Class 3 wineries have a $1000.00 license fee and manufacture 500,000 gallons or more annually.
A copy of the applicant’s state manufacturer’s liquor license (Class 02 Winegrower’s license) must be submitted with the license application.
The license must be renewed annually.
Registration Statement (For Brand Registration)
Brands not already registered with the Commission must be registered prior to, or simultaneously with, the direct shipper application filing. The brand registration requirements are fulfilled by submitting the Registration Form and copies of all federal label approvals for products being shipped into Illinois.
- In the first column titled Name, Address, City etc., write “N/A” If sales are only made to consumers.
- In the second column titled Trade-Mark Brand, or Name of Item, list brands not already registered with the Illinois Liquor Control Commission.
- In the third column titled Geographical Territory, write “Illinois”.
- In the fourth column titled Time Period, write “Until further notice”.
Note: If brands are already registered, you do not need to complete this form.
Self -Distribution
Class 1 wineries who will not produce more than 25,000 gallons annually may apply for self-distribution privileges by completing the “Self-Distribution Exemption” form. Wineries qualifying for the self-distribution exemption may not sell more than 5,000 gallons to retail licensees in Illinois each year. Wineries producing more than 25,000 gallons annually, including all Class 2 and 3 wineries are not eligible to self-distribute in Illinois.
Bond
Applicants must obtain a bond for the amount of $1000 or 2x their estimated monthly tax liability, whichever is greater, up to a maximum of $100,000. (See RL-26-W, Step 2: “Figure your tax due” for alcohol content breakdown with corresponding excise tax rates to estimate monthly tax liability.) Form RL-1, Liquor Tax Statement of Liability must be submitted with the bond paperwork. In addition you will need to submit one of the following:
- Form REG-4-A “Financial Responsibility Bond”
- Form REG -4-D “Financial Institution Irrevocable Letter of Credit Bond”. or
- a cashiers check to cover the cost of a Certificate of Deposit that the Illinois Department of Revenue will purchase for you.
Applications to Register to Pay Sales and Excise Taxes
Illinois requires applicants to register their business with the Illinois Department of Revenue (IDOR). You do not need a separate application to register to pay the Liquor Tax. IDOR will automatically register you to pay this excise tax using the application you submitted to receive your wine shipper license. The license certificate you receive from the Illinois Liquor Control Commission will contain your liquor license number as well as an Illinois Business Tax Number (IBT). This IBT must be used to file and pay liquor tax. However, you will need to complete a separate application to register for the sales/use tax that you will need to file and pay.
IDOR will automatically send you a request for an application once you have been registered for the liquor tax or you can register online. You may register by visiting the IDOR website or by completing and mailing in Form REG-1. Applications submitted electronically will be processed significantly faster than applications submitted by mail. When completing Form REG-1, Step 3, question 11, write “Direct Wine Shipper”. When completing Step 3, question 13, applicants should select “sales to Illinois Consumers” and “Liquor at Retail” as type of business. *IMPORTANT: WAIT UNTIL AFTER YOU RECEIVE YOUR SHIPPER’S LICENSE BEFORE FILING THE REG-1 TO AVOID LICENSING COMPLICATIONS.*
Once the application is processed you will receive an Illinois Business Authorization Certificate of Registration. Your Sales/Use Tax Account Identifier Number will be listed on the certificate. Keep track of the number because it will be needed on sales/use tax payment forms.
Note: Do not confuse your identification numbers. You will receive a Liquor License number, an Illinois Business Tax number (IBT), and a Sales/Use Tax Account number. The Sales/Use Tax Account Number is sometimes also referred to as an IBT number. However; this number is different from the IBT number that is used to pay the liquor tax.
Winery Shippers are required to file and pay state sales tax and excise tax on all shipments to IL consumers. The state sales tax is 6.25%; payment schedules will depend on the estimated amount of total sales. Local sales tax is not required.
Excise taxes must be filed and paid every month, including months in which 0 shipments occurred. Once your Winery Shipper’s License has been issued, the IDOR will mail you tax form RL-26-W “Liquor Direct Wine Shipper Return.” Winery Shippers have the option of filling the form electronically on the IDOR Website or by mail. Winery Shippers who choose to file and pay electronically will receive a discount of 2% if their return and payment are filed and paid on time. This discount is not available to those that use the paper method.
Annie Bones, Wine Institute
Georgia is a “Go”: Residents Can Now Join Wine Clubs and Buy Wine Online from All Wineries
May 14th, 2008
Good news, wineries - shipping to Georgia just got a whole lot easier!
As we mentioned in a previous post, House Bill 1061 had passed in the House and has since passed in the Senate. It made its way onto the Governor’s table on April 15th, and Georgia Governor Sonny Perdue signed it into law yesterday. The long-awaited bill amends Code Sections 3-6-31 and 3-6-20, a source of problems for many wineries. Before the bill passed, Georgia’s direct shipping laws were very restrictive, only allowing direct shipment by wineries without a distributor relationship in Georgia and by all wineries for onsite purchases. Onsite shipments were limited to five cases per consumer or per household.
However, the passage of the bill effected many favorable changes to Georgia’s direct shipment law. The statutory amendments eliminate the problematic provision which prohibited wineries from shipping offsite orders to Georgia residents if the wineries were represented by a distributor in Georgia. This significantly opens up the state to both in- and out-of-state wineries that were not previously permitted to ship offsite sales directly to consumers.
Furthermore, the amendments added a definition of “winery” to the statute, defining it as “any maker or producer of wine whether in this state or in any other state, who holds a valid federal basic wine manufacturing permit.” (Section 3-6-31(a)).
Another noteworthy change is the addition of the age verification requirement found in Section 3-6-20(d)(4):
“Before accepting an order from a consumer in this state, the holder of a special order shipping license shall require that the person placing the order state affirmatively that he or she is of the age required by Code Section 3-3-23 and shall verify the age of such person placing the order either by the physical examination of an approved government issued form of identification or by utilizing an Internet based age and identification service;”
The new age verification requirement strengthens the affirmative statement of age provision (as was required prior to the amendments), working to assuage the fears of those who believe direct shipping creates an unreasonable risk of online ordering by underage individuals.
The bill also introduces a few minor changes. A winery no longer has to post a bond, designate sales territories, or name a wholesaler in each territory (thereby taking a conflicting law off the books). Wineries are also prohibited from shipping to licensed premises and are required pay excise taxes and state and local sales taxes from every sale shipped to a consumer in Georgia. In addition, of-age individuals can now purchase up to 12 cases of wine from each licensee per year (up from 5 cases per household pre-HB 1061).
Overall, although wineries must still obtain a special order shipping license and brands must still be registered in order to ship into the state, HB 1061 is going to live up to expectations and prove itself a valuable step for proponents of direct shipping. More wineries can now direct ship to Georgia and reach more consumers, benefiting both Georgians and non-Georgians alike.
The bill takes effect July 1st, 2008. Stay tuned for more details and permit requirements.
Arizona Confirms a Minor Change to its Direct-To-Consumer Law
May 6th, 2008
The Arizona Department of Liquor Licenses & Control has confirmed a minor change to its direct-to-consumer wine shipping regulations, effective immediately. Under the original interpretation of the direct shipping law Arizona residents could not receive direct-to-consumer wine shipments unless they purchased the wine on-site, and shipments did not exceed 2 cases per consumer per year.
The new interpretation of the law allows wineries to ship to Arizona consumers, as long as the consumer has physically visited the winery at anytime during the calendar year prior to placing the order. Now Arizona consumers who have visited the winery may place off-site orders and have multiple shipments of wine sent to them so long as the combined shipment (throughout the calendar year) does not exceed the 2 case limit. If Arizona consumers wish to have additional wine shipped to themselves in subsequent years, they will need to physically visit the winery each and every year. There continues to be no reporting, tax or permit requirements under the “on-site shipping law”.
Please visit the Wine Institute website for additional information about shipping to Arizona s or contact Annie Bones, State Relations Coordinator, Wine Institute, at 415-356-7530 or abones@wineinstitute.org.
*The rules and requirements for wineries producing up to 20,000 gallons of wine in a calendar year with an approved direct-to-consumer permit/ self-distribution license are not affected by this change.
Annie Bones, State Relations - Wine Institute
Florida escapes capacity cap at the wire
May 4th, 2008
It came down to the wire, but the always heated battle in Florida ended with the legislative session closing on Friday with no bills making it out of the state congress. Multiple bills were considered for wine direct shipping, most of which included a “capacity cap” on annual production for wine shippers. The major winery associations opposed all bills that included a capacity cap, and were therefore mostly pleased when the final bell rang without the passage of a restrictive bill. This was a truly classic battle between winery associations and the powerful wine wholesaler lobby.
Lacking legislation that would have created a permit system, the Florida Department of Business and Professional Regulation (DBPR) will likely maintain the status quo, meaning that wineries can ship to Florida without a permit as long as they remit excise taxes and do not ship to dry counties.
The scene at the Direct to Consumer Symposium in Napa on Friday was very interesting. Many attendees were listening to the “state of the states” update on direct shipping legislation, while we simultaneously received updates on the status of the session in Florida. Much of the two day event covered the subject of capacity caps, which have become an extremely hot topic of late. The Family Winemakers of California are currently making their case against the State of Massachusetts that production caps are unconstitutional. The action heats up again at the end of July.
Update Your Address Books: New Hampshire Has a Revised Direct Shipping Monthly Report
April 25th, 2008
New Hampshire has updated their Monthly Direct Shipping Report Form. According to the NH Bureau of Enforcement, many wineries have been sending this report to the wrong address; the new form has been issued in part to remedy the incorrect send-to address. The new form is in an Excel format for easier use, and will automatically calculate the total due, based off of the invoice totals that you enter. The new form is available on the NH Liquor Commission Website. You can also view the new form by clicking here.
Make sure your records are up to date with the current contact info for the NH Bureau of Enforcement:
Mailing Address (send your returns to this address):
Bureau of Enforcement
Direct Shipping
PO Box 1795
Concord, NH 03302-1795
Physical Address:
Bureau of Enforcement
Direct Shipping
10 Commercial St
Concord, NH 03301
Tel: (603) 271-8543
Fax: (603) 271-3758
Though the updated form is in an electronic format, New Hampshire does not allow you to submit copies of invoices or payment electronically. You can only send in an electronic version of the Direct Shipping Monthly Report if you have zero orders to report; you can send zero order reports to directshippers@liquor.state.nh.us.
Illinois Direct-to-Consumer Permit Applications Available
April 24th, 2008
The Illinois Direct-to-Consumer Permit applications are now available on the Wine Institute and Illinois Liquor Control Commission’s websites. Beginning June 1, 2008 wineries will be required to have an “Out-of-State Winery Shipper’s License,” file reports, obtain a bond and pay sales and excise tax in order to ship wine to consumers in Illinois. Wineries with a valid Shipper’s License issued by the Illinois Liquor Control Commission will be permitted to ship up to 12 cases a year to a consumer who is 21 years of age or older, an increase over the 2 case annual limit in the reciprocity law being replaced.
The application process separates wineries into 3 classes based on the total of gallons manufactured annually. The license for each class varies. Class 1 wineries have a $150 license fee and produce less than 250,000 gallons annually. Class 2 consists of wineries producing more than 250,000 gallons but less than 500,000 gallons annually. The license fee for Class 2 is $500.00. Class 3 wineries have a $1000.00 license fee and manufacture 500,000 gallons or more annually. A copy of the applicant’s state manufacturer’s liquor license (Class 02 Winegrower’s license in CA) and copies of all federal label approvals must be submitted with the license application. Brands not already registered with the Commission must be registered prior to, or simultaneously with, the direct shipper application filing. Class 1 wineries may apply for self-distribution privileges by completing the “Self-Distribution Exemption” form. Class 2 and 3 wineries are not eligible to self-distribute in Illinois.
Once the Illinois Winery Shipper’s License is issued, the Illinois Department of Revenue will mail the permit holder the Liquor Direct Shipper Wine Return Tax form. Excise taxes must be paid monthly and there is a $1000.00 bond requirement. The permit holder has the option to pay excise taxes electronically or by mail. Permit holders are responsible for paying sales tax. The Department of Revenue has not published instructions for sales tax registration at this time. As soon as the information becomes available it will be posted on the Wine Institute website. Should you have any questions please contact the Wine Institute State Relations Department at 415-356-7530.
Annie Bones | State Relations | Wine Institute
Wine Is Not the Maine Event
April 18th, 2008
A bill that would have allowed in-state and out-of-state producers, suppliers, importers, wholesalers, distributors and retailers to ship wine to Maine consumers passed through the Senate but after a close vote, died on the House floor yesterday evening. If LD1987 (a.k.a. SP781) would have passed as amended by the Senate, the bill would have allowed licensed entities to ship up to 108 Liters of wine to an of-age individual in a calendar year. Other requirements:
- Containers of wine shipped cannot be smaller than 750 mL
- Report and pay sales and excise taxes
- The bureau may adopt rules requiring specific labeling and registration requirements for direct shippers
- “The direct shipper or 3rd party carrier contracted by the direct shipper… check for a valid form of identification demonstrating proof of age.” Common carriers register with the state of Maine.
LD 1987 went far in its legislative journey before failing in the House. The bill would have been a step forward for Maine consumers and offered wine producers, retailers, and wholesalers alike an equal opportunity to ship wine directly to eager consumers.
Caps Off to Dolan’s Intentions
April 11th, 2008
In October of last year, wineries began shipping directly to Ohio residents under a new direct shipping permit law. When the provisions of the law in Ohio were first announced, one of the major subjects of controversy was the capacity cap, which only allows wineries that produce less than 150,000 gallons annually to obtain a permit. Capacity caps continue to be a subject of controversy in all the states that use them (currently Arizona, Massachusetts, Indiana Kentucky and Ohio; Florida could adopt a 250,000 gallon cap if SB1096 or HB1293 is passed).
Continuing the controversy, Ohio Representative Matthew J. Dolan is looking to increase the capacity cap for wineries from 150,000 to 250,000. Though the increase in production volume may be a “little step” in the right direction, it certainly seems like a very little step, allowing only 17 more California wine labels to be shipped to Ohio residents. According to The Plain Dealer, Dolan originally vowed to eliminate the cap altogether, but got a lot of pushback from the Ohio Department of Commerce and from Ohio Distributors (as Uncorked points out, “no surprise”).
Just next door, Indiana also prevents wineries producing over a certain amount of wine per year from shipping directly to its residents. Indiana’s original capacity cap was 500,000, but will increase on July 1, 2008 to 1,000,000 gallons since SB0107 was signed on March 13th by governor Daniels. Though this is the highest volume cap of the four states that have said restrictions,
Many will agree that any permit system that discriminates against a winery for the amount of wine produced is not an ideal permit system. Furthermore, the constitutionality of these caps is being challenged through litigation (see Family Winemakers of California vs. Jenkins). State legislators may adopt a capacity cap restriction for any number of reasons, but none of them seem very fair. The state may claim that it is trying to protect its own wineries by establishing the volume cap just above that of the highest producing in-state winery, but who else is being protected while the consumer’s interests fall by the wayside?
Update: In our original post, we mistakenly stated that that Indiana has a capacity cap that is similar to OH, KY, MA, and AZ. The 500,000 gallon “cap” in Indiana that will increase to 1,000,000 gallons on July 1st, 2008 only applies to wineries in that the applicant must not sell more than this amount of wine per year IN Indiana, excluding wine shipped to an out-of-state address.
Rhode Island and Alabama: Let My Pinot Go!
March 27th, 2008
As legislative sessions continue to progress across the country, more and more legislative bills concerning direct shipments of wine are being considered. If the bills mentioned in this post pass, two states will change from being prohibited states to permit states. The last state to change from a prohibited state to a permit state was Indiana, and that turned out to be a little messy. The bills for Rhode Island and Alabama are straight forward and fair - let’s hope they make it through the process.
If HB 520 or its companion SB 412 in Alabama, and S 2125 in Rhode Island pass, they would allow for any licensed wine producer, supplier, importer, wholesaler, distributor or retailer to apply for a direct shipper license ($100 initial fee; $50 per year thereafter) that would allow them to ship up to 24 cases of wine per year to an of-age resident of the state, as long as the resident is not located in a dry area. Sales and excise taxes must be paid annually.
Tennessee Wholesalers - Crossing the Line?
March 24th, 2008
There are a couple of direct shipping bills in the Tennessee legislature that would allow Tennessee consumers to order wine from any winery or retailer in the country, with some of the regular restrictions. This would be a big deal, considering direct shipments into Tennessee have not been allowed from any state in recent history. However, what would normally be a run-of-the-mill direct shipping bill has turned into a subject of controversy over actions taken by Tennessee wholesalers to sway public opinion of the bill.
Wine Spectator Online reports that Tennessee wholesalers have been sending direct-mail and online initiatives to Tennessee residents, saying that SB 1977 and its counterpart, HB 1850 are a threat to Tennessee’s youth and asking them to sign a petition for children to come first. Jackson, one of the authors of the bill, has notified the Tennessee ethics commission of the wholesalers’ intent, saying that this is illegal lobbying because the direct-mail and online initiatives say nothing about being funded by the Tennessee wholesalers. He argues, “[those who view the teen drinking initiatives] think it’s some sort of philanthropic organization that’s concerned about youth consumption of alcohol. But the populous is deprived of the ability to find out who’s really behind this campaign” and that the bill wouldn’t increase availability of wine to minors. Tom Wark of the Specialty Wine Retailers Association issued a press release about Tennessee SB 1977 and has this to say about minors obtaining wine via direct shipping:
The Supreme Court of the United States and the Federal Trade Commission both looked at the issue and determined that minors are highly unlikely to use direct shipping to obtain wine. No state that allows direct shipping has reported even a small problem with minors accessing wine via direct shipping.
That being said, we should focus on what is really important about this bill: consumer choice. If passed, SB 1977 would allow permitted wine manufacturers, producers, suppliers, importers, wholesalers, distributors and retailers to ship wine directly to Tennessee residents. Permitted shippers could ship no more than 18 liters per year to an of-age Tennessee resident in a “wet” area. The permitted shipper would have to pay a $100 application fee, a $50 annual license fee, and pay sales and excise taxes on all shipments.
Kill the Bill: Maryland and Direct Wine Shipping
March 19th, 2008
Maryland continues to be one of six states in which direct shipping is completely prohibited. In a previous post we reported that HB1260 and SB616 were favorable direct shipping bills in Maryland’s current legislative session. Both of these bills died in committee. If passed, they would have allowed permitted wineries and retailers to ship directly to Maryland residents. Though the bill was widely supported, the Licensed Beverage Distributors of Maryland argued that the bill would “hurt Maryland wineries, reduce distribution-related jobs in the state, hamper tax collection and make it easier for minors to obtain alcohol” (as reported in the Baltimore Sun), “It’s always a tough fight when a majority of people stand up for the common good against entrenched special interests”
