Taxes. Always everyone’s favorite topic. Although when the topic is about things to do that result in dramatic savings on our taxes suddenly it becomes much more interesting. I recently gave a presentation at the Napa Valley Vintners Wine law forum where one of the topics that I covered was all about clarifying the specifics around how most wineries are NOT taking advantage of paying a MUCH reduced rate on their TTB excise taxes.
The short answer on this is if your winery is selling 5,000 cases of wine per year then you can qualify for $10,000 off of your TTB excise taxes due for those wines. (*As long as your winery ownership meet the qualifications- see my earlier blog post on those details)
So for those 5,000 cases you sold in a year, instead of paying $18,664 in TTB excise taxes your winery could instead only pay $7,965. That’s a 57% savings! This savings comes from your winery and your wines qualifying for and taking advantage of the Small Producers Tax Credit.
There are two types of winemaking activities that you as a winery need to pay attention to related to how you will want to file your excise tax reports in order to correctly take advantage of these hefty tax savings since filing them incorrectly can lead to serious audit issues with much heftier late and underpaid fees due to the TTB!
Both of those two types of winemaking activities are related to whether or not your winery receives (& then bottles and sells) any wines from outside winery facilities. (Not under your own ownership)
What might that look like? Both of these are very common scenarios in the winemaking world. The first is if your winery has some wine made for you at another winery site that is then sent to your winery as finished wine. The second is if your winery purchases wine from the bulk market. If your winery regularly (or ever) practices either of these types of activities with wines made at another site then here is how to take advantage of that $10K per year tax savings.
You will want to make sure that you file and pay the TTB excise taxes on those wines (or the blends they go into) from your TTB permit number at your winery address. This will then also mean that if all your bottled wines go to an off site wine warehouse that you will need to send them “Taxpaid”.
That is it. At least in the most simple terms. However since I realize that this is a topic that is still commonly misunderstood definitely reach out to my office for clarification on your winery’s TTB excise tax dynamics and we can discuss what sorts of annual tax savings you can take advantage of.
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