OK can somebody tell me what is the proper procedure for tax on wine shipments to another state?
It seems some wineries charge their local tax, some charge my state tax (I was assuming this was the correct procedure)
What is correct?
Thanks
It all depends on a variety of factors, most of which relate to the structure and various licenses held by the entity you’re buying from and whatever shipping partner they may employ.
Suffice it to say it’s an incredibly complicated matter, and there is no single answer. As you’ve observed, there are almost as many different policies as there are stars in the night sky…
Thanks. I thought there was going to be no easy answer to this one. I just got a quote on some wine from an entity that evidently has a very high tax rate…it kinda threw me when I saw it.
Sorry - it’s not complicated. If a winery is legally licensed to ship to a state, virtually all of them require the winery to collect and pay sales tax, as well as report all shipments. And in no case would a winery collect local sales tax for an out of state shipment.
Wineries also have to pay excise tax to states. It’s relatively small amounts - so we just suck it up and don’t charge the consumer. But some wineries may choose to add the excise tax into the sales tax amount.
Thanks for your input Brian. So if I hear you right they should be charging my state tax and maybe excise tax, not their state and local taxes. If they are doing otherwise may lead me to believe they are not licensed in my state and could be a problem.
Wineries that charge local sales tax generally do so under the premise that title is conveyed at the winery, and that they are shipping it as your agent per your instructions. I’m not giving legal advice, but getting a shipping permit where one is available is safer for the winery for obvious reasons.
There are a few states that allow purchases made at the winery to be shipped back to a person’s home state without a shipping license. One of the responses to post-911 restrictions about carrying wine on planes. In those cases, local tax would be collected. I’m not sure how legal the “title conveyed” idea really is.
No matter what, I doubt the consumer is at risk. Just the shipper.
I was thinking that was a federal law that applied to all states-- the idea being that you’d be free to bring the wine back with you if you’d bought it at the winery, so why force you to schlep it on the plane.
In general - you’re right - you can bring wine back with you. But shipping is a different issue. I’m not sure why -but it is. And there are some states - like Utah - that don’t allow you to “import” alcohol into the state. Maryland used to run stings on people bringing wine in from West Virginia.
All a product of the 21st Amendment (repeal of Prohibition) that gave states independent control of alcohol taxation and laws.
Georgia changed its law to allow wineries to ship purchases made while the customer was physically at the winery once the wholesalers realized that it was drawing attention to the restrictive practices they spent tons of money encouraging from tourists to wine country who otherwise didn’t really care about alcohol shipping regulation. Though I will give the legislature credit for allowing wineries to acquire direct shipping licenses, despite the limitations on them.
To add to the morass, the regulations that impact WINERY shipping are often somewhat different from RETAILER shipping, if you can believe that.
Brian makes a fair point point that winery shipping policies are reasonably consistent (although as noted there are still lots of moving parts on a state-by-state basis). It’s more retailer shipping where you see widely varying lists of ship-to states and sales tax collection policies…
Last time I read the law, in Maryland one can’t even bring their wine cellar with them when moving their primary residence to the state unless you get a special permit and use one of the licensed shipping companies. Maybe that changed in 2011 when they opened up direct shipping from wineries as I have not read the entire law since but before 2011. There was and I think still remains a per month limit allowed for hand carry which is small and has on occasion as Brian notes been enforced but not for at least a decade.
Brian is right. If a winery in state A has “nexus” with State B, then they will be collecting the sales taxes applicable to State B. It’s always the “Ship To” state that generates the taxable event. That said, if a winery does not charge any tax, you, the purchaser are still obligated to self remit “use” tax to your state. The underlying transaction is still taxable. Remember, sales/use tax is a tax on the consumer, not the seller. The seller, in most cases, only does you a “favor” by collecting and remitting for you.
If a seller doesn’t collect, that means they are not registered with the buyers state to collect and remit tax. They have no tax legal obligation to do so. But that doesn’t change the underlying sale.
This very issue is the root of all the Amazon/EBay “Main Street” fairness type acts. The issue gets complicated because the governments are trying to apply a brick and mortar law to the internet age and that’s not easy to do. And, the law is codified by the SCOTUS, via the Quill case, so until SCOTUS rules again, any new law will be vigorously challenged. That’s why states are trying to circumvent the existing case law by designing their own laws to dovetail with the existing statutes. Typical government grab attempt.
Many states require the winery to obtain a license to legally ship wine into the state, and a condition of that license is that the winery collect and remit the sales tax. Granholm vs Heald enabled this strategy for requiring the collection of sales tax on alcohol even in the absence of a local nexus.
-Al
Here’s a good resource:
http://wi.shipcompliant.com/WhoShipsWhere.aspx
Click on your state and see what the requirements are. Most that allow shipping require the winery to pay Sales and Excise Tax. There are exceptions. Two examples are:
- Colorado only requires Excise Tax.
- Florida requires the consumer to report and pay Sales/Use tax.
In NYS, many California wineries will charge BOTH the state tax (4%) + the local county portion (3% - to…5% in the 5 NYC boroughs?) to where the wine is shipped to, not necessarily purchased from (which, as you see, can vary within the State).
So if a CA winery is charging me 9% tax on an order and then ships to me I still need to pay my local tax correct? I get a double whammy. Geez maybe I will just stick to those licensed and collecting taxes in my state.
Thank you for your responses. Good link Brian.
I think the seller is at risk, not you. They collected sales tax which they should remit to WI. The fact that they collected 9% instead of 5% is an issue for you - but I don’t think the state of WI would have any claim against you.
thanks