Direct Shipment & Compliance

Connecticut Will Permit Direct Shipping of Wine by Retailers in July

Ship Compliant Wine Blog - Thu, 06/13/2019 - 11:44

Beginning July 1, 2019, Connecticut will become the latest state to permit the direct-to-consumer (DtC) shipping of wine by out-of-state retailers.

Governor Ned Lamont signed SB 647 on June 5. The new law amended many provisions of the state’s alcohol statutes, including the current rules for wineries’ DtC shipments of wine, which now include language opening the state to DtC shipping of wine by retailers.

Retailers looking to make DtC shipments of wine to Connecticut consumers will have to comply with the same regulations that have long applied to wineries. These include:

  • License — Retailers must apply for, and receive, a Retailer Wine Shipper’s Permit from the Connecticut Liquor Control Division. The annual cost of this license is $600. (The annual license cost for wineries remains unchanged at $315).
  • Consumer volume limits — Direct shippers may ship no more than 5 gallons of wine in any two-month period. This is roughly the equivalent of two 9-liter cases of wine.
  • Collect and remit taxes — Direct shippers must remit to Connecticut both excise taxes and sales taxes on their DtC sales to the state. Connecticut’s sales tax rate is 6.35 percent with no local taxes. (Connecticut changed its excise tax rates for wine and spirits in a separate bill; these rates are described below.)
  • Report sales — Direct shippers must file a monthly report of wine shipments to the state. This report is in addition to the excise and sales tax returns, and must provide details on each order shipped, such as the recipient’s name and address, and the contents of the package.
  • Advertising restrictions — When advertising or offering wine to Connecticut consumers via the Internet or other media, direct shippers must include their Connecticut shipper’s permit number.
  • Do not sell below cost — Direct shippers must comply with section 30-68m of the Connecticut Revised Statutes, which prohibits retailers from selling wine in Connecticut for a price less than what they paid for it at wholesale.
  • Package labels — Direct shippers must place a label on any package containing wine that reads, “CONTAINS ALCOHOL SIGNATURE OF A PERSON AGE 21 OR OLDER REQUIRED FOR  DELIVERY.”
  • Obtain consumer signature — Direct shippers must either also hold an in-state transporter’s permit or work only with parties licensed as in-state transporters. In addition, before a delivery can be finalized, recipients of the delivery must show their IDs proving they are of age to receive wine and provide their signature.

With the passage of SB 647, Connecticut joins the small, but growing, ranks of states that permit out-of-state retailers to make shipments of wine direct to consumers. Currently, the other states are: Alaska, Louisiana, Nebraska, Nevada, New Hampshire, North Dakota, Oregon, Virginia, West Virginia, and Wyoming. (California, New Mexico, and Idaho also permit retailers in each others’ states to ship to their residents.)

The opening of another state to DtC shipping is part of a positive trend. By establishing rules and regulations for how retailers can join into the Connecticut DtC market, the state is enabling itself to effectively monitor, tax, and police that market. This, in turn, means the residents of Connecticut can legally access a national selection of wines that might otherwise not be made available locally.

Connecticut also raises excise taxes

In addition to SB 647, the governor signed HB 7427, the state’s budget. This bill includes a 10 percent increase on Connecticut’s excise taxes on wine and spirits, which will become effective October 1, 2019. Thereafter, the taxes on alcohol in the state will be as follows:

  • Still wine with an ABV of 21 percent or less: $0.79 per gallon (up from $0.72)
  • Still wine with an ABV greater than 21 percent, and all sparkling wine: $1.98 per gallon (up from $1.80)
  • Liquor: $5.94 per gallon (up from $5.40)
  • Liquor coolers, with an ABV no greater than 7 percent: $2.71 per gallon (up from $2.46)
  • Beer, and cider with an ABV no greater than 7 percent: $7.92 per barrel; $3.96 per half-barrel; $1.98 per quarter-barrel; or $0.26 per gallon (remains unchanged)

Request a demo of ShipCompliant, or discover how ShipCompliant by Sovos gives wineries control over DtC compliance and reporting.

 

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The Vinners: Customer Awards Announced at the 2019 ShipCompliant Wine Summit

Ship Compliant Wine Blog - Wed, 06/12/2019 - 11:17

Another top-shelf ShipCompliant Wine Summit in the books. After a day of learning, sharing, networking and wine drinking, ShipCompliant by Sovos exclusively announced the winners of our first annual customer awards: The Vinners.

A reaction to new forces in the wine market

With Millennials replacing Boomers as key demand drivers, wineries have quickly adapted to emerging market trends, as exemplified by The Vinners. In a world dominated by social media and graphics, it’s important to stand out visually and grab the attention of consumers. Increasingly, wineries are taking notice that creating a friendly and welcoming atmosphere can quickly turn first-time guests into loyal customers.

The age of Amazon and same-day delivery has made ecommerce a necessity for wineries, so having an organized, straightforward website is crucial. As made evident in the ShipCompliant DtC report, purchasing wine is no longer exclusively an in-person activity; it has transformed by expanding the avenues utilized to promote  wineries’ brands and how they engage wine drinkers.

How the Vinners won

Wineries were able to nominate themselves or other ShipCompliant customers for a chance to win in any of the following categories: Most Creative and Captivating Label, Most Engaging Tasting Room Experience, Most Successful Wine Club Promotion and Must-Follow Instagram Account.

Member of the ShipCompliant team had their work cut out for them, with numerous strong nominations received in each category. After much consideration, the following Vinners were selected and announced during our closing session, a perfect way to kick off the wine party. We are very excited to share here the winners of our first annual Vinners awards:

And the Vinners are….

Most Creative and Captivating Label: Wine Guerrilla 

wine guerrilla

Most Engaging Tasting Room Experience: Del Dotto Vineyards

del dotto

Most Successful Wine Club Promotion: nakedwines.com

naked wines

Must-Follow Instagram Account: Messina Hof Winery

messina hof

ShipCompliant congratulates the winners and all our customers for their hard work and valuable contributions to the wine community over the past year. It was great to connect and learn some new best practices from the winners, especially during our wine party.

Feedback?

Attendees, we’d love to hear your feedback. We aim to make each summit more memorable than the last. We want your input when it comes to speakers, new topics and new ways to make it a one-of-a-kind experience.

See You Next Year!

We’ll hope to see you next Spring for the 2020 ShipCompliant Wine Summit. In the meantime, keep up with us on Twitter, Facebook, and LinkedIn.

 

Find out how ShipCompliant by Sovos can help your winery achieve compliance.

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ICYMI: ShipCompliant by Sovos Wine Summit 2019

Ship Compliant Wine Blog - Tue, 06/11/2019 - 17:02

More than 300 customers, partners and industry luminaries joined us at this year’s ShipCompliant by Sovos annual Wine Summit in Napa. If you were there, you know it featured a rich exchange of ideas about how wineries can manage compliance and improve customer experience in the digital age. And if you missed it, here’s a glimpse of the event:

From wine tourism experiences to regulatory updates

Keynote speaker Robin Shaw, a specialist in wine tourism development and consultant for Wine Tourism Australia, emphasized the winery experience in the opening session. Robin worked for decades to help wineries improve their consumer experiences and grow their businesses. She showcased a number of standout wineries from around the world that have improved consumer experiences by establishing relaxed and friendly attitudes, installing unique and alluring artwork, providing kid-friendly or alternative entertainment options, and incorporating local environment and culture into tasting rooms.

One of the other highlights of the event was the regulators panel, where attendees heard directly from the agencies governing the wine industry. This year’s panel included Janelle Christian, industry outreach program manager with the TTB; Matthew Botting, general counsel for the California ABC; and Kelly Routt, director of administrative policy and process for the Oregon LCC. They discussed a range of issues affecting the wine industry, including how wineries may — and may not — interact with marijuana, what has been happening with recent trade practice enforcement; winery advertising restrictions and social media; and recent changes to wine labeling rules. The regulators stressed caution on emerging topics, like marijuana, while the rules are still developing.

Shipper success and sales tax in the DtC channel

We also announced the ShipCompliant Carrier Compliance portal. FedEx is the first to adopt this new tool, developed to help secure the DtC channel for wineries and carriers alike by managing shippers’ license information. FedEx speakers joined ShipCompliant by Sovos leaders to discuss the development of this solution, why FedEx took this approach, and what wineries and retailers can expect, whether they’re ShipCompliant customers or not.

More than 64 percent of the DtC channel goes to states that require carrier reporting. Without automation or proactive license checks, carriers risk non-compliance, and therefore, wineries are also at risk when delivering to those states.

ShipCompliant streamlines the required data sharing of licensing between FedEx and its shippers. For ShipCompliant clients, the change is minimal. They just need to add their FedEx account numbers to their ShipCompliant accounts. Wineries or retailers that are not using ShipCompliant can create an account in the new License Portal and input their DtC permit information, which is then immediately shared with FedEx. Gone are the days of mailing in copies of permits or lag times in deliveries due to permit review.

We also dove deeply into sales tax, which has long been a source of confusion and complexity. That ratcheted up in the last year, since the Supreme Court ruled in South Dakota v. Wayfair that states have freer rein to require out-of-state businesses to collect sales tax.

Chuck Maniace, Sovos vice president of regulatory analysis and design, explained that the impact of Wayfair has been less traumatic for wineries than it has been for the broader market of remote sellers.This is because DtC wine shippers have long been required to assume a sales tax liability in most states they ship to as a precondition of getting a DtC shipping license.

However, there are some exceptions to this rule, and Chuck highlighted states that have passed post-Wayfair rules that have changed things for DtC wine shippers. Colorado stands out largely because of how complicated the state’s sales tax regulations are, whereas California is notable as it has implemented a destination-based tax calculation system, meaning wineries shipping within the state must calculate and collect local taxes from many more locations.

Compliance, data and customer experience in the digital age

We hosted several panels focused on the critical issues wineries face in the digital age. For example, ShipCompliant Regulatory Counsel Alex Koral moderated a discussion involving Rebecca Stamey-White, partner at Hinman & Carmichael, and Sean O’Leary, president of O’Leary Legal and Policy Group. Together, they analyzed several major ongoing lawsuits, including Tennessee Wine & Spirits Retailers Ass’n v. Thomas, which is pending a decision from the Supreme Court. They also provided an advocate’s perspective on the trade practice enforcement actions and the spate of new alternative distributor arrangements that have recently debuted.

They also ranged into the broader question of how suited beverage alcohol regulations are to the modern marketplace, as well as consumer expectations in a world of Amazon and Instagram.

Meanwhile, John Curnutt, revenue and systems specialist at Chateau Montelena, discussed the winery’s process for gathering, analyzing and acting on its data to glean business insights. Adrienne Stillman, marketing director at WineDirect, John Keleher, founder at Community Benchmark, and Andrew Adams, editor, Wines Vines Analytics shared tips on what data is available to wineries to help better understand their customers.

And building off the themes of our opening keynote, Zach Kamphuis from Commerce7, Juli Barron from Opus One and Adam Ivor from Gliding Eagle joined Curry Wilson, strategic partner manager for ShipCompliant, to discuss the most important customer experience tools for wineries to manage their websites, marketing and delivery. Conversation ranged from the importance of making the international channel feel welcome and important to a winery, both in person when they visit, to the need for fast websites, since more than half of potential customers will leave a site that takes longer than three seconds to load.

The wrap up

In addition to lots of learning and networking opportunities, we hosted our first customer awards this year. The Vinners showcased the amazing work our customers have done and set the stage for our annual tradition: wine hour. Honorees includedWine Guerrilla, Del Dotto Vineyards, nakedwines.com and Messina Hof Winery.

We’d also like to thank our sponsors for making this year’s GCS Wine Summit possible:

  • FedEx
  • WineDirect
  • Wineshipping
  • Wines Vines Analytics
  • Gliding Eagle
  • Copper Peak Logistics
  • Commerce7
  • Pack n’ Ship Direct
  • Cellar
  • Astra Digital
  • UPS
  • VinSuite
  • MainFreight
  • WineCo
  • Esker
  • Parsyl

And finally, thank you to Steve Gross, vice president, state relations at the Wine Institute, who helped close the day with his much-anticipated state of the DtC industry.

Our appreciation to all of you who attended. We’re already planning and anticipating next year’s event and hope to see you there.

 

Find out how ShipCompliant helps wineries navigate the complexities of wine regulations and ensure both compliance and profitability.

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BevAlc Roundup | Where DtC Shipping of Wine Is Still Not Allowed, the NFL Eases Advertising Restrictions, and American Single Malt

Ship Compliant Wine Blog - Tue, 06/04/2019 - 13:35

Last week we hosted our annual ShipCompliant by Sovos Wine Summit at the Napa Valley Marriott, which was a rousing success! Thanks so much to everyone who turned out, from our fantastic list of presenters and speakers to our wonderful users and audience. At the conference, we presented on regulatory updates, ways to improve your tasting room experiences, and announced our new Compliance Portal with FedEx, which will help the carrier ensure that wineries and retailers involved in DtC shipping are properly licensed. If you weren’t able to attend, we missed you! But we will be putting out a recap soon, so stay tuned to this feed.

In other news from this last week, it is with an extremely heavy and saddened heart that we report on the passing of TTB Director John Manfreda. Many tributes have come out in the last week all making it clear how dedicated John was to his work, but more so how wonderful it was to know him personally. We have shared below some of these tributes.

Elsewhere in the Roundup, we look at how tariffs are affecting the beer industry — and how they could get worse; also, we look at where opportunity for growth in the wine industry remains in the world of climate change and increasing mergers, and finally, natural ways to prevent pests in grape fields are gaining traction.

In case you haven’t heard, the 2019 Direct-to-Consumer Wine Shipping Report has been published. Download your copy today here.

Thanks for reading the Roundup this week. As ever, be sure to check out the rest of the ShipCompliant by Sovos blog for regular updates, and we’ll see you again in another couple of weeks.

Regulatory News and Discussions

TTB Newsletter | This week’s top news includes information about how to register for one of our remaining trade practice seminars, details about the spring edition of the Unified Agenda, and a notice that we’re hiring two regulations specialists. TTB

TTB Newsletter — Special Edition |  In this special edition of the TTB Newsletter, we announce with deep sadness and regret the passing of our Administrator, John Manfreda. TTB

The Passing of John Manfreda of the TTB | A tragedy for his family and a tragedy for the industry he so faithfully served for so long. Booze Rules

Legislation to Remove DTC Barriers Continue Nationwide; Five States Remain Closed to DTC | Steve Gross, of Wine Institute, urged attendees of the 2019 ShipCompliant by Sovos Wine Sumit in Napa to support the efforts of Free the Grapes, a coalition of wineries and other wine industry representatives seeking to remove barriers to direct-to-consumer wine shipping. Wine Business

Beer Industry Shudders at Trump’s Threat to Impose Tariffs on Mexican Imports | President Donald Trump’s threat to impose tariffs on Mexican imports sent shivers through the U.S. beer industry, which warned Friday that it could be hammered with nearly $1 billion in increased annual costs if the countries don’t resolve their differences. Chicago Tribune

Can State Regulators Enforce Liquor Laws That Federal Courts Have Found Unconstitutional? | Even though the law was adjudicated and found unconstitutional, this still hasn’t stopped Michigan from threatening those who ship wine into the state with sanctions. Irish Liquor Lawyer

U.S. Beer Industry Blames Trump Tariffs For 40,000 Job Losses | A report by two trade groups showed U.S. beer-industry jobs dropped 40,000 since 2016 as metal tariffs boosted aluminum-can costs, leading to a drop in investment. Bloomberg

Industry Updates: Market Conditions and Developments

ShipCompliant Announces Carrier Compliance Portal With FedEx | ShipCompliant by Sovos is excited to announce our Carrier Compliance Portal, which enables wineries and retailers to share their state license data with FedEx. ShipCompliant

NFL Eases Restrictions on Alcohol Sponsorship | The National Football League has said it will allow active players to appear in beer adverts as well as ease restrictions of wine and spirits companies becoming “official sponsors” of franchises. Drink Business

Wine Industry Poised for Opportunity Amid Climate Change, Big M&A Deals: Rabobank | Although we anticipate economic and sector challenges ahead, in the current market wine industry professionals have many opportunities to set their businesses up for success. North Bay Business Journal

Is Legal Marijuana Hurting Beer Sales or Helping Them? | There is such animosity reverberating throughout the cannabis community over the fact that beer, wine and spirits are legal and widely accepted. Forbes

Digestif

This Wine Was Brought to You by Bugs | Winemakers are increasingly moving from pesticides to pests to combat disease and create better wines. Wine-searcher.com

The Emerging Styles of American Single Malt | Distillers discuss three prominent subcategories that are making their way to the forefront. SevenFifty Daily

How Wineries Can Better Market to Millennials | If you have a winery, the odds are very good that you are collecting data. But if no one is looking at the data then it might as well not exist. Beverage Industry Enthusiast

Why Do Winery Instagram Feeds Suck So Much? | Every winery needs to step back and think about what they’re doing on Instagram. What is the point of a consumer following you? Spit Bucket

Why Native Yeast Fermentations Are Critical For Expressing Terroir | In seeking to express the true character of a site, winemaker Brandon Spark-Gillis was brought one step closer by lab results. SevenFifty Daily

 

Find out how ShipCompliant by Sovos can help your business stay on top of compliance by signing up for a free demo.

The post BevAlc Roundup | Where DtC Shipping of Wine Is Still Not Allowed, the NFL Eases Advertising Restrictions, and American Single Malt appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

ShipCompliant Announces Carrier Compliance Portal with FedEx

Ship Compliant Wine Blog - Wed, 05/22/2019 - 14:30

ShipCompliant by Sovos is excited to announce our Carrier Compliance Portal, which enables wineries and retailers to share their state license data with FedEx.

“This major milestone in DtC wine shipping is evidence of ShipCompliant’s commitment to work with our industry partners and state regulatory agencies to ensure the ongoing success of this important distribution channel,” said Larry Cormier, vice president and general manager of ShipCompliant. “From the very beginning, we have had one goal: to remove compliance barriers for our customers so they can focus on growing their businesses.”

The wine industry has been under increased scrutiny from states. Businesses must comply with complex state-by-state regulations in order to bring products to market, distribute to customers and grow. ShipCompliant by Sovos stays on top of all the regulations businesses are up against and provides easy-to-use solutions that companies can use to remain compliant.

Changes in the industry

States are increasing their scrutiny over the direct-to-consumer (DtC) wine shipping channel. More states are requiring reporting by carriers and fulfillment houses to cross-reference incoming shipments with license status of the winery and retailer. As a result, carriers now require copies of DTC permits and licenses in each state to ensure their own compliance with state rules.

Our commitment to DtC growth

ShipCompliant is committed to protecting the DtC channel. By proving to states that wineries and retailers are compliantly shipping, we are confident that states will continue to allow businesses to grow.

The benefits

FedEx recognized there is a quicker way to accomplish the data inputs and analysis needed to effectively review license status. ShipCompliant has built the Carrier Compliance Portal for DtC permit sharing with FedEx.

By using the Carrier Compliance Portal, wineries or retailers shipping wine DtC can go online at any time to input state permits and update existing effective dates. This information is then automatically updated to FedEx, so there is no lag time in delivery of shipments due to license expiration. Businesses can then easily ship via the FedEx channel despite any DtC permit requirements, since data is shared automatically after input into the license portal.

Find more information about the Carrier Compliance Portal here, or learn more about ShipCompliant by checking out our free guide to DTC wine shipping.

The post ShipCompliant Announces Carrier Compliance Portal with FedEx appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | California Revamps Sales Tax Rules, What’s Impacting the DtC Market, and Is Climate Change Affecting How Wine Tastes?

Ship Compliant Wine Blog - Mon, 05/20/2019 - 15:59

We are now a little over a week away from our 2019 ShipCompliant by Sovos Compliance Wine Summit. This annual event, previously known as the DIRECT conference, is one of the highlights of the year for us at ShipCompliant by Sovos, as we are able to connect directly with our users on what is happening in the world of wine regulation and what changes we are making to our services to better enable this industry to remain in compliance with those regulations.

There have been a number of changes over the past decade both to the regulation of the wine market, particularly the direct-to-consumer shipping market, and to ShipCompliant itself. But what hasn’t changed is our commitment to connect with and support our users. So if you haven’t signed up yet, sign up today! This year’s Wine Summit will be held on May 30 at the Napa Valley Marriott.

For this week’s roundup, we look at recent changes to California’s sales tax regulations that will have a big impact on wineries making direct-to-consumer shipments in the state; there was also some major news last week in the world of wine criticism, when Robert Parker announced his retirement after decades of shaping the taste of wine; and we jump on the Game of Thrones bandwagon, and look at some recent brands that have come out based on the wildly popular series.

In case you haven’t heard, the 2019 Direct-to-Consumer Wine Shipping Report has been published. Download your copy today here.

Thanks for reading the Roundup this week. As ever, be sure to check out the rest of the ShipCompliant by Sovos blog for regular updates, and we’ll see you again in another couple of weeks.

Regulatory News and Discussions

TTB Newsletter | This week’s top news includes some of the most common reasons why we return alcohol beverage formulas for correction. Also, two of our senior leaders were recently awarded the 2019 Treasury Leadership Legacy Honor, and we’re hiring an alcohol labeling specialist in Washington, DC. TTB

California Amends Tax Rules for Delivered Sales Affecting Instate Wineries | California’s recent change establishes a requirement on in-state businesses to collect more local district taxes, which will affect almost every winery shipping wine in the state. ShipCompliant by Sovos

Trump’s Trade War With China Hurting U.S. Wine Industry’s Bid to Increase Sales There | New tariffs imposed by Beijing Monday will make U.S. wine an even more expensive product for Chinese consumers, as their leaders battle with the Trump administration in an escalating trade war between two of the world’s largest economies. Press Democrat

Majority of US Senators Support Permanent Tax Reform for Brewers, Importers | A majority of U.S. Senators support making permanent excise tax relief for alcohol producers and importers. Brewbound

Governor Signs Bill Changing LIquor Distribution Rules | Oklahoma Senate Bill 608 requires the top 25 wine and spirits manufacturers to offer their products to all wholesalers. The Journal Record

Another Attempt to Let USPS Ship Alcohol | Legislation has recently been reintroduced in the House to allow the Postal Service to ship alcoholic beverages to consumers. Fed Smith

Industry Updates: Market Conditions and Developments

A Tribute to Robert M. Parker Jr. | The father of modern wine criticism, our publication’s founder and namesake, my greatest mentor and a dear friend, it is with mixed feelings that I announce that Robert M. Parker Jr. will, as of today, be formally hanging up his wine criticism boots and retiring from Robert Parker Wine Advocate. Robert Parker Wine Advocate

US Wine, Beer, Spirits Consumption “In a Holding Pattern” as Public Leans Toward Less Alcohol | The huge size of the 2018 wine grape harvest in the North Coast and California and the changing tastes of U.S. consumers other beverages were evident in sobering sentiments of industry professionals and consumers presented at the outset of the event. North Bay Business Journal

Top Issues Impacting the DTC Channel | About five years ago, 90% of direct-to-consumer wine sales came from tasting room visitors and wine clubs. Now, that’s dropped to about 40% with the other 60% of DTC sales coming from online shopping, according to ShipCompliant general manager Larry Cormier. Wine & Spirits Daily

Pride in a Job Well-Done, or Blood Money? | The cost of learning the truth from the TTB about the benefits to investigators from making cases against industry members. Booze Rules

New Distribution Service Offers Brewers a Chance to Test Markets, Fill Excess Capacity | Starting in June, nine U.S. states will begin receiving limited shipments of popular but hard to obtain craft beers via a new program called “Guest Brewer.” Brewbound

Digestif

Wine Tasting in Westeros | Game of Thrones, one of the biggest television events in history, has spawned a range of merchandise. But is wine from a world of assassination, brutality and zombies safe to drink? Drinks Today

Do Your Favorite Wines Taste Different? | There’s a good chance it’s because of climate change. Heated

How Sulfites Affect a Wine’s Chemistry | Wine professionals discuss sulfur’s impact on everything from oxidation to aromatic compounds and texture. SevenFifty Daily

These Experimental Distilleries Are Using Science to Artificially Age Whiskies | From soundwaves to pulses, nothing is off limits. Robb Report

What Are the Most Asked Questions in a Wine Shop? | Unlike restaurants, where it’s easy to feel restricted by the selections or intimidated by sommeliers, wine stores are the perfect place to take your time and learn new things. Wine Enthusiast

 

Find out how ShipCompliant by Sovos can help your business stay on top of compliance by signing up for a free demo.

The post BevAlc Roundup | California Revamps Sales Tax Rules, What’s Impacting the DtC Market, and Is Climate Change Affecting How Wine Tastes? appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

California Amends Tax Rules for Delivered Sales Affecting Instate Wineries

Ship Compliant Wine Blog - Wed, 05/08/2019 - 11:06

On April 25, 2019, the Governor of California approved Assembly Bill No. 147, amending the state’s rules on when and where businesses shipping through the state have a sales tax obligation, which will likely have major implications for wineries selling direct-to-consumer (DtC).

Over the last year, we at ShipCompliant by Sovos have been monitoring as states have adopted economic nexus rules following the Supreme Court’s ruling in South Dakota v. Wayfair last June, and how they impact the DtC wine shipping market. For the most part, these changes to nexus rules have been focused on increasing tax collection from out-of-state retailers.

California’s recent change, however, establishes a requirement on in-state businesses to collect more local district taxes, which will affect almost every winery shipping wine in the state.

Local district taxes are voter-approved taxes imposed by cities, counties and other local jurisdiction that are added to the California base sales and use tax rate.

What Does Assembly Bill No. 147 Require?

The main provisions of the bill require remote sellers to collect and remit California sales and use tax if the seller had over $500,000 in sales of tangible personal property for delivery into California in the preceding or current calendar year. A similar requirement had previously been set out by the California Department of Tax and Fee Administration (CDTFA) in December 2018, where the economic thresholds for remote sellers was set at 200 or more separate transactions or retail sales in excess of $100,000. The new bill raises the revenue threshold to $500,000 and removes the per-transaction threshold.

However — and this is where we see the biggest potential impact on California wineries, the bill also amends the rules regarding when an in-state and out-of-state business must collect local district taxes.

California law prior to Wayfair only required a business to collect a local district tax if the business was “doing business” in that district. Last December, the CDTFA set out a new rule, in light of Wayfair, stating that if a California business met the $100,000 in sales or 200 separate transaction threshold in a district then the business would be required to collect that district’s local taxes. This new rule went into effect on April 1, 2019.

This new bill changes that rule. Retroactively applying to April 1, 2019, and going forward, if a business makes over $500,000 in annual revenue in California, it is required to collect and remit all district taxes, regardless of how much revenue it receives from any single district. This means that all California wineries with an annual revenue of $500,000 or more will have to collect district tax on all shipments they make within the state, even for districts where they make a single shipment.

Non-California wineries have long been required to collect sales tax on shipments to the state, as a condition of getting a DtC license there. However, this requirement only extended to the state rate of 7.5% (6% plus the 1.5% state-wide local rate), but not to the district taxes. For those wineries, a district tax only applied if they were “doing business” in that district, which implied specific physical presence there. Going forward, non-California wineries will have to collect and remit the same district taxes for all locations in the state if they meet the $500,000 of California revenue threshold as an in-state winery.

What Can I Do to Prepare?

Wineries shipping DtC in California must now be ready to calculate local district taxes across the state, and cannot rely on only collecting tax based on their premises rate. This will require a concerted effort to look up rates across the state at the time of purchase, to avoid the potential pitfalls of under- or over-calculating tax collected from customers.

ShipCompliant by Sovos users currently can receive California district tax rates across the state. This can be very easily done by switching one’s California Tax Preferences to “Local Taxes.” Thereafter, any tax lookup for a California location, whether done in an account or through our integration with sales systems, will include the proper local district rate.

____________________________________________________________________

We have seen a tremendous amount of change regarding tax policy over the last year as states move to expand tax obligations on out-of-state businesses. For the most part, DtC shipping wineries have not been greatly affected as most states have for years required them to accept a tax obligation in order to ship wine (except for a few states, like Colorado, Minnesota, and Iowa).

This change by California, however, will have a major impact on DtC shipping wineries, as California is both by leaps and bounds the largest source and destination for DtC shipped wine. Starting April 1, 2019, and going forward, the glut of these shipments will now need to have local taxes assessed and paid to the state.

View Assembly Bill No. 147 in its entirety.

Request a demo of ShipCompliant

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Colorado to Enforce Sales Tax Rules for Remote Sellers In June

Ship Compliant Wine Blog - Thu, 05/02/2019 - 15:36

When a winery ships wine direct-to-consumer (DtC) across state borders, the sale skips over distributors and retailers, who are generally the parties who collect and remit the recipient-state’s taxes. As such, when a state moves to permit DtC shipping by wineries, they often require that any applicant for a DtC license first accepts an obligation to pay the state taxes that it would otherwise receive.

Unlike most states, however, Colorado does not make the assumption of a sales tax obligation a condition of getting a DtC license. Instead, a winery shipping to the Centennial State would only need to collect and remit sales taxes if it has nexus (that is, a substantial connection) there.

Previously, nexus was only established by having a physical presence in the state. However, like many other states, subsequent to the South Dakota v. Wayfair Supreme Court decision, Colorado enacted rules which sought to compel sales tax collection and remittance responsibility on sellers based on their economic presence in Colorado, regardless of whether they may be physically located there.

In December 2018, the state of Colorado made substantial changes impacting the sales tax collection and remittance requirements imposed on both in-state and remote sellers. The state extended a grace period for companies to comply with these requirements through May 31, 2019.

But beginning June 1, 2019, under the new rules, many wineries will be required to collect Colorado state sales tax and any local sales tax for state-administered localities. The rate will be determined based on the location of your Colorado customer. These rules specifically do not impact any obligation sellers may have in home-rule localities (these are localities in Colorado that have determined to administer their sales taxes entirely independent from the state agency).

New Obligations for Remote Sellers

In line with other states, the requirement is imposed on any organization that, in the previous or current calendar year has:  

  • $100,000 or more of gross sales or services delivered in Colorado, including exempt sales.

Any winery that meets this threshold will now have nexus in Colorado and be required to collect and remit sales taxes on their DtC shipments of wine to the state. (Previously the state had indicated that retailers making 200 or more transactions in the state would also have nexus; however, in the latest rules from the state, that threshold has been removed.)

This will require that the winery takes the following actions:

  • Register with the Colorado Department of Revenue (DOR) as a Sales Tax Collector. This may be done at https://www.colorado.gov/revenueonline/_/.  Any winery that had previously registered as a Use Tax Collector will need to amend its registration.
  • During, or after, that registration the winery must also register under their Sales Tax Account for each tax jurisdiction that they will ship into. These jurisdictions are determined by the state, and while the winery is required to only register for those into which they actually ship, it may be worthwhile to register for all of them (683 in total) — the registration is at no cost.
  • For each tax jurisdiction that the winery selects, the DOR will assign a unique four-digit code that must be attached to the winery’s Colorado Account Number when filing their Sales Tax Returns, in order for the state to process how local taxes should be disbursed.
  • ShipCompliant users should make sure to enter these codes into their account so that we can properly populate the necessary Sales Tax Returns. We have recently added an upload function to our license portal so that a user can add all of their codes with one single action. If you are a ShipCompliant user you should receive direct messages soon that will more thoroughly explain how this should be done.

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Wineries shipping DtC have long had to deal with sales tax rules and regulations across the country, so in many ways they are much more prepared for the post-Wayfair world of economic nexus to which other remote sellers are just getting used. Nevertheless, there are still states like Colorado that are presenting new challenges for DtC wineries (and Colorado, with its uniquely complex sales tax policies, makes that an extra challenge).

Wineries would do well to review their sales tax practices to ensure they are best enabled to handle the changing world of sales tax regulation. We at ShipCompliant by Sovos are committed to providing that enablement.

The post Colorado to Enforce Sales Tax Rules for Remote Sellers In June appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Nominate Your Winery for the 2019 ShipCompliant Vinners Awards

Ship Compliant Wine Blog - Tue, 04/30/2019 - 15:14

Is your vineyard a Vinner? It’s time to find out.

The annual Vinners Awards will make their debut at the 2019 ShipCompliant Wine Summit in Napa at the end of May. Any vineyard that is a ShipCompliant customer can nominate itself or a peer to win an award on one of the following categories:

  • Most creative and captivating label
  • Most engaging tasting room experience
  • Most successful wine club promotion
  • The “must follow” Instagram account

Winners (or Vinners, in this case) will be announced in an awards show at the ShipCompliant Wine Summit on May 30. Aside from earning glory and fame, Vinners will be featured on the ShipCompliant website and receive an official award to symbolize their achievement.

All ShipCompliant customers are eligible; you do not need to attend the 2019 ShipCompliant Wine Summit to win an award.

Nominate your vineyard by May 10 to be eligible to win! 

The post Nominate Your Winery for the 2019 ShipCompliant Vinners Awards appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Roundup: Oklahoma Distribution, Black Wine Consumers, Climate Change

Ship Compliant Wine Blog - Mon, 04/29/2019 - 13:08
Oklahoma Distribution Laws Get Contentious, Why Doesn’t The Wine Industry Pursue Black Consumers?, and Climate Change and Wine

During this last couple weeks, there came and went the dubious — or at least psuedo — holiday of 4/20, a day based around consuming cannabis (thankfully, alcohol still has almost every other holiday claimed for its consumption). As such, it was likely no surprise in the number of articles we saw talking about pot’s burgeoning legalization and what that means for other industries — in particular the beverage alcohol industry. (Not that there hasn’t already been a lot said about that, from chicken little claims that the sky is falling to more mellowed relaxed comments that there’s plenty to pass around.)

To highlight these articles, we have selected three in particular that caught our attention, set out in a special section below. But there was lots of other news that came out as well, so in addition to Getting Into the Weeds, this week we look at how vague trade practice rules set out in the 1930s and 1980s are stifling growth today, also, ways for wineries to better engage with their customers online and spike e-sales, and what it takes to be a standout judge of whiskey.

In case you haven’t heard, the 2019 Direct-to-Consumer Wine Shipping Report has been published. Download your copy today here.

Our annual Global Compliance Wine Summit (previously DIRECT) will be held on May 30 at the Napa Valley Marriott. We are putting together a great schedule, so make sure to sign up soon.

Thanks for reading the Roundup this week. As ever, be sure to check out the rest of the ShipCompliant blog for regular updates, and we’ll see you again in another couple of weeks.

Regulatory News and Discussions

TTB Newsletter | This week’s top news includes the publication of our “TTB Bootcamp for Brewers” presentation given at the Craft Brewers Conference, information about which file types are compatible with Permits Online, and a TTB auditor job announcement. TTB

Is a 1935 Alcohol Beverage Federal Trade Practice Law Stifling Innovation? | Congress’ aim to prevent the recurrence of the “social evils” that led to Prohibition is the centerpiece of the unfair trade practice provisions of the Federal Alcohol Administration Act of 1935. Booze Rules

Tariffs Fomenting Turmoil in World Wine Markets | California is on the front lines of President Donald Trump’s unwise trade wars, and the wine industry is under fire. The Press Democrat

Are Crafts Looking to Kill the Pubs in Illinois? | There is a theory out there, that is actually backed up by statistics, that the presence of craft brewers is hurting bars and taverns. Irish Liquor Lawyer

Willamette Valley Wine Purity Bills Pass Oregon Senate | Two bills to raise the varietal and regional content standards for Willamette Valley wines passed the Oregon Senate on Wednesday, and now move to the House. Portland Business Journal

Duopoly or Pro-Business? Shots Taken In Oklahoma Liquor Distribution Fight | The difference between “shall” and “may” in one portion of Oklahoma’s new alcohol laws has left liquor stores, a locally owned wholesaler and some legislators pushing to break up what they call a duopoly in the liquor distribution market. NonDoc

Industry Updates: Market Conditions and Developments

Why Is the Wine Industry Ignoring Black Americans’ $1.2 Trillion Buying Power? | You see, apparently, black people know very little about wine. It’s a novelty for us, and when we do drink it, the sweeter the better. VinePair

Why Breweries Are Turning to Small-Format Cans | The opportunity to reach new customers is just one factor attracting brewers to the eight-ounce can. SevenFifty Daily

Amazon Wine 3.0: Is the Online Retail Giant Getting Back in the Wine Business? | Amazon has twice given up selling wine over the past decade, perhaps the two most notable flops in the e-commerce giant’s history. But it looks like the company may be getting ready to try again – call it Amazon wine 3.0. Wine Curmudgeon

Gallo Deals Are the Gifts That Keep on Giving for Premium Wine | The premium branded wine market can do with all the help it can get which is what makes E&J Gallo’s acquisition strategy potentially so important, not just for itself, but for the overall wine industry. The Buyer

How a Digital Negociant Helped Change the U.S. Wine World | The combination of greater DtC potential and digital commerce, when combined with a French ‘negociant’ model, led to surprising success for a California company. Forbes

Are You Selling Enough Wine Online? | Could it be that U.S. wineries are not reaching out to consumers via digital marketing the way companies in other consumer products industries are? Winebusiness.com

Getting Into the Weeds

What Does the Wine Industry Have to Learn from the Cannabis Industry? | Just as the burgeoning cannabis industry followed lessons from the wine industry as it has worked to establish its legitimacy, wine can learn from cannabis in connecting with consumers. Fermentation

Why Weed and Wine Have More in Common Than You Think | We want people to think of cannabis in the same way they think of wine, as a gourmet product. Wine Enthusiast

How to Succeed In Wine and Weed: The Herb Somm Tells Her Story | While some in the industry are attempting to sway consumers back towards wine, other brands and corporations are investing in marijuana as a way to diversify their holdings. Forbes

Digestif

Thinking Outside the Wine Box about Climate Change & the Future of Wine | Miguel Torres recently warned that the wine industry is not doing enough to fight climate change and there is no doubt that he is right. The Wine Economist

The Future Is Bright For Texas Wine | An emerging wine region on the cusp of something great. Wine Spectator

The Fine Art of Being a Whiskey Judge | A lot of blood, sweat, and tears goes into honing one’s craft; in this case, spirits. The Whiskey Wash

The post Roundup: Oklahoma Distribution, Black Wine Consumers, Climate Change appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | TTB Labeling Comments Period Extended, Record California Grape Crush in 2018, and Be Your AVA’s Champion!

Ship Compliant Wine Blog - Tue, 04/16/2019 - 09:37

Last week saw the publication of a number of industry and agricultural reports from 2018, including global grape production, California wine crush, and craft beer sales, and we’re happy to say that more-or-less everything looks positive. Even the lower-than-in-the-past growth numbers for craft beer are a sign of continued success, especially when considered against other non-beverage alcohol industries.

But that’s hardly all the news we have to report on today. This Roundup also includes a couple looks at the looming ill-effects caused by the ongoing trade war and what might happen if it ratchets up against Europe. We then also look at the announced Gallo-Constellation deal, and hear how women are coming to lead and dominate the conversation about beer regulations in D.C.

In case you haven’t heard, the 2019 Direct-to-Consumer Wine Shipping Report has been published. Download your copy today here.

Our annual Global Compliance Wine Summit (previously DIRECT) will be held on May 30 at the Napa Valley Marriott. We are putting together a great schedule, so make sure to sign up soon.

Thanks for reading the Roundup this week. As ever, be sure to check out the rest of the ShipCompliant blog for regular updates, and we’ll see you again in another couple of weeks.

Regulatory News and Discussions

TTB Newsletter | This week’s top news includes the top 5 reasons why you should file your permit applications online versus mailing paper forms, plus information about TTB’s fiscal year 2018 annual report that is now available online, and an adjustment to the civil penalty for violations of ABLA. TTB

Looming Trade War Bodes Ill for Wine | U.S. Editor W. Blake Gray offers his take on the threat of tariffs against European wine. Wine-searcher.com

Wine Industry Floods the TTB With Its Opinions On Wine Nutritional Labeling | Last month the TTB extended its deadline for Notice No. 176, the so-called “Modernization of the Labeling and Advertising Regulations for Wine, Distilled Spirits and Malt Beverages,” until June 26, 2019. Forbes

FTC Kills Deal to Merge Alcohol Distributors | The U.S. Federal Trade Commission said on Monday it had pushed two wine and spirits distributors to scrap their merger because of “significant concerns” about the deal. Reuters

California Wineries Shut Out Form China Amid Trade War | When China imposed retaliatory tariffs on American goods last April, vintners at Wente Vineyards in Livermore feared the move would push them out of China, the world’s fastest-growing wine market, for months or years. They were right. SF Chronicle

Amazon Planning a Deeper Diver Into Alcohol Sales? A D.C.-Area Job Posting Suggests So | Amazon.com Inc. is looking for a booze business policy and lobbying expert, and it could portend a push into more alcohol sales for the online retail giant. Washington Business Journal

Industry Updates: Market Conditions and Developments

California Crushes Record 4.3 Million Tons of Winegrapes in 2018 | According to the report, the state crushed more than 4.28 million tons of wine grapes in 2018 – up by 7 percent compared to 2017, when the state crushed approximately 4 million tons of wine grapes. Wine Business

Global Wine Output Recovered in 2018 from 60-Year Low | After a 60-year low in 2017, when production was dented by extreme weather in Europe, including drought and storms, world output rose 17 percent last year to 292.3 million hectoliters. Reuters

CBC: Slowing Growth in 2018 Was “Not a Blip” | Slower growth and increased competition are the “new normal,” Brewers Association (BA) leaders hammered home on the second day of the trade group’s annual Craft Brewers Conference (CBC). Brewbound

What Gallo’s $1.7 Billion Buyout of Constellation’s Bargain-Priced Wines Really Means | The 30 brands include familiar winery names like Ravenswood, Clos du Bois, Manischewitz, Cook’s and Mark West, mostly bottles that sell for $11 or less. SF Chronicle

Digestif

Female Lobbyists Change Face of Beer Industry | The leading voices for the beer industry in Washington, D.C., are women, breaking the stereotype that beer is a male-dominated business. The Hill

On Wine Marketing — Be the Winery That Champions Your AVA | I’m here to urge wineries to consider being the champion of their sub-appellation; to be the winery that educates about all things home turf; to be the advocate and endorser of that officially recognized region they call home. Fermentation

What Is Oxidation Doing to My Wine? | Oxidation can be responsible for the flat taste of wine that’s past its drinking window, but it can also be the element that unlocks the array of flavors that wine grapes can offer. Wine Enthusiast

Three Studies Take A Look at Various Wine Bottle Closure Preferences | in 1999 synthetic was about 2% of the wine bottle closure market, screw cap was at 3%, one-piece natural cork was about 34% and technical (composite) cork made up 61%. Forbes

What’s Fueling the Rapid Growth of Hard Seltzer? | Drinks professionals discuss the factors behind the low-ABV category’s rise — and its impact on the industry. SevenFifty Daily

 

Find out how ShipCompliant by Sovos can help your business stay on top of compliance by signing up for a free demo.

The post BevAlc Roundup | TTB Labeling Comments Period Extended, Record California Grape Crush in 2018, and Be Your AVA’s Champion! appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

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