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.
Ohio Ups Gallonage Cap
June 23rd, 2008
On June 2nd, Governor Strickland signed an emergency measure that upped the capacity cap from 150,000 gallons to 250,000 gallons. The measure goes into effect on July 1, 2008 and amends Section 4301.10(A)(8)(c) of the Ohio Revised Code.
The 100,000 gallon increase results in benefits for wineries and consumers alike. Now wineries producing between 150,000 and 250,000 gallons annually will be able to get a direct shipper’s permit and have access to the state which, in turn, provides Ohio residents with a wider selection of wines from which to choose. However, the cap is still in place, and until Ohio joins the ranks of states which have no capacity caps, both wineries and consumers will suffer.
Wineries that produce between 150,000 gallons and 250,000 must apply for the B-2a and/or S permits with new application forms, however, as of June 23, 2008 Ohio has not yet updated their permit applications to reflect the increased capacity cap. To obtain general information on obtaining a B-2a and/or S permit, visit the Ohio Division of Liquor, and click on “Direct Shipping Information”. To check for updated applications, click on “Agency Operations Section (Liquor Agencies, Spirituous Liquor)”.
Georgia - Amended Wine Special Order Applications Available
June 22nd, 2008
The amended Georgia Special Order Shipping License application is now available on the Wine Institute and Georgia Department of Revenue websites. Wineries will be required to have an approved Wine Special Order Shipping License and comply with new direct-to-consumer shipping regulations beginning July 1, 2008. The new law increases the quantity limit to 12 cases per person per calendar year per winery and allows GA consumers to join wine clubs. The old rule allowing the shipping of on-site sales without a license and prohibiting wineries with distributor relationships in GA from receiving a wine shipping license for off-sale shipments is repealed as of July 1, 2008.
The amended application has a license fee of $50 and must be submitted with a completed sales tax registration application and brands registration form. Direct shippers will be required to pay state and local sales tax, pay excise tax and file reports. In addition, direct shippers must obtain a copy of the consumer’s government issued id or use an online age verification service at the time of purchase. Applicants will be mailed their wine special order shipping licenses along with reporting forms and instructions for paying taxes. Wineries currently holding special order licenses issued prior to July 1, 2008 do not have to complete the amended application and should expect to receive reporting forms and tax payment information in the mail. Should you have any questions please contact Annie Bones in the State Relations Department at 415-356-7530 or abones@wineinstitute.org.
Following is the list of required forms. Click here for a printable checklist.
- Notice: To Wineries with Valid Federal Basic Manufacturing Permits
- Form CRF–002 State Sales Tax Registration Application
- Form CRF–004 Additional Ownership/Relationship Application (If Applicable)
- Form ATT-6 State Alcohol License Application (“Winery Special Order Shipping”)
- Form ATT-104 Brands/Brand Labels Registration Application
- Form ATT–17 State Beverage Alcohol Personnel Statement
- Form RD-1061 Power of Attorney (If Applicable)
Annie Bones, State Relations - Wine Institute
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.
Georgia Direct Shipper Application Update
June 13th, 2008
Georgia will require wineries to have an approved direct shipper’s permit, pay excise tax, state sales and local sales tax in order to ship direct to GA consumers beginning July 1, 2008. The Georgia Department of Revenue, Alcohol and Tobacco Division is developing a New Direct Shipper Application which will include information about how to comply with the new tax and reporting requirements. The new application is expected to be available by July 1, 2008 and the Department of Revenue anticipates it taking approximately 30 days for the applications to be processed. Beginning July 1, 2008 wineries will not be permitted to send on-site or off-site wine shipments to GA consumers until they have received an approved direct shipper’s permit.
The New Application will be posted on the Wine Institute website as soon as it becomes available. Permits issued to wineries without distributors in 2008 will continue to be valid after 7/1/08. Should you have any questions please contact Wine Institute’s State Relations Department at 415-356-7530.
Annie Bones, State Relations - Wine Institute
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.
It’s Not Easy Being Green…But Electronic Filing Makes It Easier
June 9th, 2008
Image, “Office Paper, 2007″ by Chris Jordan.
June 5th was World Environment Day. And in honor of the wonderful planet on which we live, here’s a look at how some states are doing their part to make it easy for direct-to-consumer wine shippers to be eco-friendly.
Generally speaking, businesses are looking to become greener; it can be cost effective, it’s good marketing, and it is better for the environment. There are several practices wineries can utilize when making the decision to become green - recycling, conservation, green farming, renewable energy, and alternative packaging - but one thing that can’t be controlled is paper consumption for licensing and reporting. Direct wine shipping is undoubtedly paper-filled; there are permit applications, licenses, monthly reports, and tax returns - just to name a few - that must be printed and mailed. There’s no doubt that the paper used in the filing of these forms contributes to the enormous rate of paper consumption in the United States. In 2007, 96.7 million tons of paper and paperboard were consumed in the United States and 54.3 million tons were recovered through recycling*. However, despite the fact that over half of the consumed paper was recovered, recovery is not the be all and end all of environmental protection. Prevention is the best and most efficient way to protect the environment from paper waste**. Electronic filing is an effective means of said prevention for wineries who can be required to submit over 500 forms per year, with an average of four pages a form. That’s 2000 sheets of paper just for reporting wine shipments!
Currently, about half the states offer some sort of electronic filing, the bulk of which consists of sales and use tax returns. Excise tax reports and copies of invoices are rarely available for electronic submission. However, North Dakota is on the forefront, offering an electronic filing option for their Direct Shipper’s Liquor Tax Report. Also, Hawaii allows direct shippers to submit copies of invoices via email. States should follow North Dakota and Hawaii’s lead, transitioning from a paper-based system to one that makes additional forms available for e-filing. Ultimately, the goal would be mandatory electronic filing for all forms in all states, if they made it easy. Such a transformation in the process will significantly reduce the amount of paper consumed and help decrease the country’s overall consumption rate, which, coupled with a continuing increase in recovery/recycling rates, will result in a near elimination of all paper waste in the not-so-distant future. Apart from environmental concerns, electronic filing could also increase administrative efficiency, reducing labor and material costs for both the state alcohol commission and for the those submitting the forms. Electronic filing is not only green, but convenient!
World Environment Day may have come and gone, but everyday should be an “Earth Day”.
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.
Wine Distribution Notes - Release 28
May 21st, 2008
The latest version of Notes on Wine Distribution by R. Corbin Houchins is now available for viewing or downloading. Release 28 highlights changes in the following categories: Age & Identity Verification, Rethinking Reciprocity and State Notes, specifically Arizona, Florida, Georgia, Maine, Ohio, Oregon and Pennsylvania. Headings of sections with substantial changes since the preceding release (published in early April, 2008) are highlighted, so that you can easily find the updated sections.
You can always view the most current version of Houchins’s Notes on Wine Distribution by visiting ShipCompliantBlog.com and clicking on the “Wine Distribution Notes” link under “Compliance Resources” on the right-hand side of the page.
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
