Compliance Basics

Definitions »Tax Tips »Label Information »


Definitions
 

Alternation of Premises

Multiple operations alternating the equipment and premises operated by the same person (i.e., Bonded Wine Premises/DSP/Brewery/Taxpaid Wine Bottling House).


Alternation of Proprietors

Multiple persons alternating the use of/sharing bonded premises and equipment.


Consent of Surety

A document that extends the terms of a bond.


Certificate of Authority

A corporation or limited liability company is domestic to the state where it was formed. However, if you decide to open up an office in another state, with the express intent to transact business there, you might be required to obtain a Certificate of Authority. Without it, your business may be subject to fines and legal action by the state in which you would be illegally transacting business. In addition, you may forfeit many of your legal rights if you are not qualified to do business in that other state. If a Certificate of Authority is filed, the corporation or LLC is subject to taxes and annual report fees in both the state of formation and any states where the corporation or LLC is qualified. In some states, Certificates of Authority are also known as Foreign Qualifications.


Control State

A state in which the state liquor regulatory agency is in the business of wholesaling and or reselling alcoholic beverages at retail. The degree to which the regulatory agency is involved varies by state.


Distilled Spirits Plant (DSP)

An establishment qualified under part 19 of 27 CFR for producing, warehousing, or processing of distilled spirits (including denatured spirits), or manufacturing of articles. An establishment qualified under Part 19 for distilling, warehousing, processing or any combination of these. Also required for alcohol reduction in wine.


Distilling Material

Any fermented or other alcoholic substance capable of, or intended for use in, the original distillation or other original processing of spirits.


Distributor/ Wholesaler

Entity licensed in a state to purchase product from suppliers and/or importers for resale to retail licensees. In many cases, principles must be residents of the state issuing the license in order to obtain the license.


Extension of Premises

Realignment of the bonded premises, to place more of the property on bond.


In Bond


Processor

Except as otherwise provided under 26 U.S.C. 5002(a)(6), any person qualified under this part who manufactures, mixes, bottles, or otherwise processes distilled spirits or denatured spirits, or manufactures any article.


Production

Wine produced by Fermentation, plus volume increase due to: Amelioration, Wine Spirits Addition, Sweetening, Production of a formula wine, Wine produced by same company outside the U.S.A (27 CFR 24.278(e)(1))


Proof

The ethyl alcohol content of a liquid at 60° Fahrenheit (F), stated as twice the percent of ethyl alcohol by volume.


Proof Gallon

A gallon of liquid at 60°F, which contains 50 percent by volume of ethyl alcohol having a specific gravity of 0.7939 at 60°F, referred to water at 60°F, as unity, or the alcoholic equivalent.


Surety Bond

A surety bond is a contract among at least three parties:


Transfer in Bond

The removal of spirits, denatured spirits, and wines from one bonded premises to another bonded premises.


Unimerc Code

Unique codes (“universal numeric”) are assigned by the Distilled Spirits Council of the United States to both wine and distilled spirits. Some states require that these codes be supplied at the same time a product is registered for sale in the state.


UPC Code

A ten-digit code which consists of a five-digit manufacturer’s code, which must be obtained from the Uniform Product Code Council, and a unique five-digit code assigned by the supplier to each brand, type and size in his product line. This is shown as a scan able bar code and is instrumental to retailers for pricing and inventory control purposes.


Unmerchantable

Wine which has been taxpaid, removed from bonded wine premises, and subsequently returned to a bonded wine premises under the provisions of 27 CFR 24.295 for the purpose of reconditioning, reformulation, or destruction.


Tax Tips
 

Federal Excise Tax Rates

$1.07 per gallon for wine 14% Alcohol by Volume or less
$1.57 per gallon for wine 14.1% to 21% Alcohol by Volume
$3.40 per gallon for Sparkling Wine


Federal Small Producer Tax Credit

Wineries producing (fermenting) less than 150,000 gallons per year are eligible for a tax credit of $ 0.90 per gallon for the first 100,000 gallons of wine removed from bond during the year. Wineries producing 151,000 to 250,000 gallons per year are eligible for $0.89 to $0.01 credit per gallon of the first 100,000 gallons removed.  Wineries producing more than 250,000 gallons are not eligible for the Small Producer’s Credit.


California Winegrower Taxes (Filed monthly or quarterly)

$0.20 per gallon for still wine and $0.30 for sparkling wine.
Subject to a $50.00 or 10% penalty (whichever is greater) if filed late.


Label Information

Mandatory Label Information
 

Alcohol Content

A statement of alcohol content in percent by volume appears on most labels. As an alternative some bottlers prefer to label wine with an alcohol content between 7 and 14 percent as "Table Wine" or "Light Wine."


Appellation of Origin*

Appellation of origin is simply another name for the place in which the dominant grapes used in the wine are grown. It can be the name of a country, state, county or geographic region called a viticultural area. A country, state or county appellation on the label means that at least 75 percent of the wine is produced from grapes grown in the place named.


AVA – American Viticultural Area*

A U.S. viticultural area is a defined grape-growing region with soil, climate, history and geographic features, which set it apart from the surrounding areas. A viticultural area appellation on the label indicates that 85 percent or more of the wine is produced from grapes grown in the particular area.

*Appellation of Origin and AVA are mandatory only when variety, vintage, and/or estate bottled, are also on the label.


Brand

The brand name is a name used by the bottler to identify the product. Any brand name is acceptable if it does not mislead the consumer.


Country of Origin

A country of origin statement is required on all imported wines. For example, "Product of _____ (insert name of country)."


Declaration of Sulfites

Required on any wine intended for interstate commerce that contains 10 or more parts per million (ppm) sulfur dioxide. Not required for wines only sold in intrastate commerce.


Health Warning Statement

Required on all alcoholic beverages containing .5% or more alcohol by volume. "GOVERNMENT WARNING" must appear in capital letters and bold type. The remainder of the statement may not appear in bold type. The statement reads as follows:

GOVERNMENT WARNING:
(1) According to the Surgeon General, women should not drink alcoholic beverages during pregnancy because of the risk of birth defects. (2) Consumption of alcoholic beverages impairs your ability to drive a car or operate machinery, and may cause health problems.


Name and Address


Net Contents

The net contents of wine are stated in the metric system of measure and is the amount of product in the container.


Optional Label Information

Estate Bottled

"Estate Bottled" means that 100 percent of the wine came from grapes grown on land owned or controlled by the winery, which must be located in a viticultural area. The winery must crush and ferment the grapes, finish, age, process and bottle the wine on their premises.


Varietal Designations

Varietal designations are the names of the dominant grapes used in the wine. Cabernet Sauvignon, Chardonnay, Zinfandel, and Merlot are examples of grape varieties. A varietal designation on the label requires an appellation of origin and means that at least 75 percent of the grapes used to make the wine are that variety. (Except "Vitis labrusca" grapes such as Concord which require 51%.)

Wine labels are not required to bear a varietal designation. Other designations may be used to identify the wine. Examples are Red Wine, White Wine, Table Wine.


Vineyard Designation

A vineyard designation on the label indicates that 95 percent or more of the wine is produced from fruit grown on the designated vineyard.


Vintage Date

A vintage date on the label indicates that 85 percent or more of the wine is produced from grapes grown in that year. If a vintage date is shown on the label, an appellation of origin, smaller than a country, must also be shown.


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