Archive for the ‘Wine compliance’ Category

Dreading tax season? It never ends for winemakers

March 11, 2016 Leave a comment
072314 FD wine yeast art

Wines being aged in barrels or bottles are counted as produced wine but aren’t taxed until the wine is moved out of bond.

Readers of a certain age will recall a 1960s TV series called “The Untouchables” featuring Robert Stack as Elliot Ness, a Prohibition agent in Chicago in the late 1920s.

Ness, under the aegis of the then-Bureau of Prohibition, was credited with breaking mobster Al Capone’s hold on Chicago by destroying Capone’s extensive bootlegging network.

Photos of Ness and his hand-picked team smashing huge vats and beer tanks and pouring illicit booze out into the streets helped viewers forget Ness was not simply an axe-wielding, anti-alcohol Carry Nation but a federal tax agent, making a case against Capone for tax evasion.

Ness and Capone are gone but the feds, through the Alcohol and Tobacco Tax and Trade Bureau (TTB), still keep a sharp eye on who pays their excise taxes.

Wines are taxed at state and federal levels at varying rates according to the wines’ alcohol-by-volume content (it’s similar for beer and spirits). The higher ABV, the higher tax per gallon. The rates goes from $1.07 a gallon (21 cents per .750 ml bottle) for wine with up to 14 percent ABV up to $3.15/gallon for wine with 21-24 percent ABV.

Wineries can either pay the taxes as they come due (see below) or post a bond, an insurance policy of sorts, against the tax bill.

Bonds are fairly cheap, as low as $100-$200 for the smallest wineries.


Excise taxes are due on wines when they become available for public consumption or purchase.

“The concept of a bond was the feds having some assurance you will pay your excise taxes,” said Bob Witham of Two Rivers Winery and Chateau on the Redlands.

Once a wine is “produced”, meaning fermentation is done, it is subject to excise tax. A winery doesn’t have to pay the tax until the wine is ready to be sold or consumed. By storing (aging) the wine in bottle or barrel in specially designated bonded areas, the winery can delay paying these taxes.

Once the wine moves out of the bonded area, which may be somewhere in the winery or an offsite storage unit, the excise taxes are due. Read more…