With tax season upon us, we thought it was an apt time to discuss the sales and excise taxes wineries must pay whether selling wine in their own county or across the country. Although sales from the web, wine club, and tasting room are a huge source of revenue for many producers, the red tape that comes with them is abundant. Not only do you have to keep track of which states allow direct to consumer wine shipments, but for which you have permits, if they have recipient quantity caps or dry counties, and finally, their tax rates.
Many wineries are surprised to learn just how complex tax rates can be from state to state. Some states have variable rates that are set at the local city or county level, while others have statewide rates, and a few have no sales tax at all. States such as California make in-state direct to consumer shipments even trickier by using a Modified Origin System which results in a tax that is a combination of where the sale took place (the origin) as well as the shipping destination. Although local tax variations are usually only .5% to 1%, they can add up quickly with just a single wine club release.
Tax rates are often changing, making tracking and updating them feel impossible, not to mention an inefficient use of time. Sometimes wineries try to minimize the time they spend managing tax rates by entering only each state’s base rate, not accounting for those who charge higher rates at local levels. While this approach keeps the winery from overcharging sales tax, which can result in serious legal consequences and severe financial penalties, it also leaves them paying the difference out of their own pockets.
vinSUITE’s ecommerce, POS, and wine club software solves the problem of direct to consumer tax rates by automatically calculating the taxes from a combination of the product type, delivery address, and up to date tax table. By integrating with ShipCompliant, customers using their services enjoy seamless, automated access to their live lookup tax service, ensuring all tax rates are accurate in real time, down to the county or city level, depending on state law. This means in the tasting room, on the website, or when processing wine club orders, compliance checks are taken care of and tax rates are always correct.
To learn more about this feature, or any other vinSUITE capability, click here. If you are a current customer who is not yet taking advantage of the ShipCompliant integration, please contact your Customer Relationship Manager. For a demo of the software and to learn how vinSUITE can help you know more so that you can sell more click here:
For additional resources on direct to consumer shipping compliance and tax laws, we recommend the following sites: www.freethegrapes.org and http://www.wineinstitute.org/initiatives/stateshippinglaws.