I hear frequently from winery staff here in California- frantically reaching out because their CA ABC type 02 license is either already suspended or in threat of being suspended. What was the source of this? Their lack of filing a required report that all CA wineries must file: the CA Board of Equalization (BOE) Winegrower tax return. (see sample here)
This required report is for your excise taxes due to the CA BOE. All CA wineries hold a CA ABC type 02 license, which then means that they also hold a winegrower account with the CA BOE. (& FYI the CA BOE & CA ABC talk to each other related to all types of ABC licenses)
The BOE Winegrower report is the required report that all wineries must file. Many CA wineries will qualify to file this report listing zeros on the first page, which means then no excise tax payments are due to the BOE. However, it must still be filed regardless of the “zero” report numbers. This is the problem that arises for many, they simply are not filing this report.
What happens to wineries that don’t file this required CA BOE report? They start receiving notices from the BOE office warning them that their winegrower account is delinquent followed eventually by a notice that their account has been suspended. This suspension is in fact their CA ABC 02 license, which then means that their winery activities and sales are technically in suspension as well!
So no wonder that winery owners or their staff are frantic when they contact me. The solution to resolve these suspensions is generally fairly simple for someone like myself who knows exactly what to ask and to look for in their winery records.See my video here showing you how to fill out this report:
First of all we need to determine how their excise tax “flow” works for their business. Do all of their wine sales get shipped out of a wine storage warehouse on their behalf? An example of this is they bottle their wine then truck it “bond to bond” to their wine storage warehouse. When an order comes in for some of their wine it gets sent to the warehouse who then packs it up and ships it out. Because the wine went into the warehouse “in bond” this then means the warehouse is responsible for filing and paying BOTH the TTB (federal) as well as the CA BOE excise taxes on that wine shipment. The warehouse will then bill the winery back for those tax payments. This exact example is when their BOE winegrower report would list all zeros on the first page and then they would not be paying their CA excise taxes directly, but rather indirectly through their warehouse.
If however a winery does ever ship out wine FROM their winery site “taxpaid” this would then mean they are responsible for filing and paying BOTH their TTB & CA BOE excise taxes. This scenario might look like they send out some of their wine club shipments directly from their winery address.
Excise taxes are probably the most common area that wineries can get into trouble with, either at the federal level with the TTB or as in this post’s topic with the CA BOE and end up in the dreaded suspension status.
Questions or concerns about your winery’s excise tax status or filings and whether you’re managing them correctly?
Contact my office for a “Compliance Check in” call