As wineries were applying for and beginning to use the new DTC shipping licenses for on-site sales to Arkansas consumers, we learned that some of the staff in the Arkansas Department of Finance and Administration were telling holders of direct wine shipper licenses that they were responsible for collecting certain local sales and use taxes. Wine Institute’s local Arkansas counsel has received a legal opinion from the Assistant Commissioner of Revenue, Policy and Legal of the Department of Finance and Administration stating that holders of a wine shipping permit are not required to collect any local taxes. Direct shippers are responsible for collecting and remitting only the statewide sales and excise taxes.
Wineries can register and file reports online through the Arkansas Taxpayer Access Point on the Department’s website at www.arkansas.gov/dfa or manually prepare and mail in the required forms. The state gross receipts (sales) tax rate is 6.5%, in addition to a state liquor excise tax that is 3% of the sales price. Direct shippers are also responsible for paying the $0.75 per gallon wine excise tax and a $.05 wine case excise tax. If the volume of wine being reported is less than one case of wine, round up. Sales and excise taxes must be reported on a monthly basis even if no activity occurred.
Annie Bones, State Relations – Wine Institute
To our valued customers:
The US beverage alcohol industry has it tough. It is one of the most regulated industries in the United States, as well as one of the most fragmented. Our industry is full of thousands of small businesses and startups; Entrepreneurs following their passion and seeking to achieve their dream of building a business as a winery, brewery, distillery or importer.
Today, I’m proud to announce a major milestone in our effort to eliminate the complexity and cost of compliance for beverage alcohol companies: AutoFile – The first fully automated filing and payment solution for regulatory reporting.
No longer will you have to print paper, cut checks, or log into online filing systems. All of your state sales tax, excise tax, direct shipping and wholesale gallonage reports are automatically filed through AutoFile, complete with payment.
AutoFile has many benefits over reporting by hand, or outsourcing:
Simple funding: State payments are made out of an account of your choosing. No painful escrow accounts to manage, or reconciliation to deal with. It’s all under your own accounts!
Total control: Anytime, anywhere, view your compliance activity, place filings on hold, review past activity. Just like online banking you can view everything submitted on your behalf, in real time.
Future proof: If a state regulatory system changes its forms, procedures or methods, rest easy, it’s our problem now, not yours.
Guaranteed: All regulatory filings will be sent on time and accurately, guaranteed.
I encourage you to try it today, using our special free trial offer:
Your first month of reporting is on us, plus we’ll waive your setup fees.
Customers: Click here to start your free trial!
Non-customers: Choose an edition of ShipCompliant right for you.
We are grateful to our many clients that assisted in creating a solution that will help our industry grow further and faster.
Effective May 1, 2014, FedEx will begin accepting on-site direct-to-consumer wine shipment orders to Arkansas residents. Both FedEx Express and FedEx Ground services will be available for wineries licensed to ship wine directly to Arkansas consumers. As we outlined in our blog post back in February, in order to be compliant, wineries must:
- Apply for a $25 wine shipping permit (call the AR ABC for a permit application – 501-682-1105)
- Ship on-site shipments only
- Send orders only to private residences
- Pay sales and excise taxes
- Limit shipment volumes to 1 case per resident per quarter, max
Wineries should also note the FedEx label placed on any shipments satisfies the requirement of having a special shipping label on any on-site orders sent to Arkansas residents. FedEx’s shipping map will be updated on May 1.
Maine, New Mexico, and Washington are the only states that have separate excise tax rates for wine and wine fortified with spirits (Edit: Some states consider a product to be fortified if it is over a certain ABV, regardless of the addition of spirits). To date, we’ve accommodated wineries that shipped fortified products to consumers by having two separate versions of the report or used calculations based on product ABV in each state. Based on user feedback, we wanted to make this process easier and more accurate, so we recently added the ability to specify that a product is fortified in ShipCompliant. With this change, we updated the Maine, New Mexico, and Washington returns listed below so that any orders containing “fortified” products will be taxed at the corresponding rate, beginning with returns that are due on or after March 20.
- Maine Direct Shipper Excise Tax and Premium Report of Table Wine, Sparkling and Fortified Wine
- New Mexico Liquor Excise Tax Return for Direct Shippers
- Washington LIQ-318 Wine Authorized Representative Certificate of Approval Holder Summary Tax Report
- Washington Liquor Shipment and Tax Report (LIQ-778 Distributor)
- Washington Liquor Shipment and Tax Report (LIQ-870 Wine Shipper)
If you are subscribed to one of the returns listed above, we will automatically update your return to tax products based on the new “fortified” product settings starting Friday, February 28 – you do not have to take any action in your ShipCompliant account unless you have fortified products.
To mark products as fortified, select the “Fortified” checkbox when adding or editing products in your account. Please note: Any orders entered prior to specifying that a product is fortified will not be retroactively updated. To learn more, read our client Knowledge Base article.
Texas sent out notices to all permitted out-of-state wine direct shippers that as of January 1, 2014, the Texas Alcoholic Beverage Commission (TABC) is updating the filing periods for the C-240, Shippers Excise Tax Return. The notice states that permittees shipping less than 4,000 gallons annually to consumers in Texas may begin filing this return on an annual calendar basis, beginning with the 2014 year. Permittees shipping more than 4,000 gallons of wine annually must continue to file this return on a quarterly basis, however the return will reset as a standard quarterly filing, as opposed to the unusual offset quarterly schedule. In other words:
* Qualified annual filers will file their first annual return due January 15, 2015
* Quarterly filers will file their first calendar quarter return due April 15, 2014
For the first filing period on this new schedule, rather than file a monthly return for December 2013, TABC instructs all permittees to include December 2013 in their first filing period of the new filing structure. ShipCompliant users need not worry calculating this extra month into their new filing periods; this month will already be included in the new filing periods by the time these filing periods need to be submitted to the state. Permittees that are ShipCompliant users and allowed to switch to annual filing should keep an eye out for an alert notifying you when the annual frequency is available for selection in your ShipCompliant account. Please note that you should only switch to the annual frequency if the state has indicated they qualify, and those that are qualified must file annually.
Following up on Sarah’s post about the new permit applications being available in Arkansas, we wanted to give you a quick update on how we’re handling some of the unique requirements in the Arkansas law. The bottom line is that you can now make compliant shipments to Arkansas if you’ve completed the permit process. Continue reading below for the full details of how we implemented this new state in ShipCompliant…
1) We deployed the updates to production last night. We also activated the appropriate rules in the ShipCompliant Direct database. The first thing to note is that this permit allows you to make onsite shipments only. Therefore, if you pass in a shipment with an Order Type of Internet, Phone, Mail, Fax, or Club (all of which map to an “Offsite” Sale Type), the order response will be Non Compliant. Shipments with an Order Type of In Person will results in a Sale Type of Onsite and therefore will be compliant if all other rules checked are also compliant.
2) Because the Arkansas DFA is going to accept the FedEx and UPS standard alcohol shipping labels and stickers as meeting the requirement for special shipping labels, we did not add any custom rules to comply with this provision. Using your standard alcohol shipping practices here will achieve compliance with respect to the labeling provision.
3) We did add a new rule called for the provision that requires all shipments to be delivered to a residential address. If you are using version 1.1 or 1.2 of the API will see this rule type come through as Business Address Shipping Prohibited. Please work with Emily Sheehan, our Integration Specialist, if you have any questions about handling or testing this new rule type. The rule is live now in Arkansas in our sandbox (dev) and demo (demo) environments.
4) When shipments are sent to ShipCompliant, they are checked for compliance against our rules database and that process always includes an address validation step prior to determining the rules that are applicable for that shipment. As part of our algorithm for validating addresses, we’ll always set the Residential Business Delivery Indicator (RBDI) flag to either R for Residential or B for Business per USPS standards. When checking this new rule type for compliance, we’ll look at that flag and only shipments with an RBDI set to R will pass the compliance check process.
In summary, if you have a permit and make an onsite shipment to a residential address in Arkansas, an order will now pass the compliance check process in ShipCompliant once you acknowledge the new rules in ShipCompliant Direct. We’ve included two sample XML responses below to illustrate both compliant and non-compliant shipments to Arkansas.