Tax Guide for Brewers and Distributors
California has the largest number of craft breweries in the United States and that number is increasing every year. We recognize that understanding and dealing with tax issues related to the brewing industry can be time-consuming and we want to help you get the information you need so you can spend more time focusing on your business.
We created this guide with topics important to your business to help you better understand your sales, use, and alcoholic beverage tax obligations.
How to Use This Guide
Each section of this guide contains information important to your business. The Getting Started section provides key resources related to registration, filing returns, account maintenance, required licenses, and other important topics.
The Ingredients section provides guidance on the sales and use tax application to items used in brewing beer.
The Industry Topics section covers many topics in an at-a-glance format that can be expanded to provide more extensive information.
Lastly, the Resources section provides links to a wealth of information, including web-based seminars, forms and publications, statutory and regulatory information, and access to live help from our customer service representatives.
Get It in Writing
Please note that the information included in this guide is general in nature and is not intended to replace any law or regulation. We understand our tax and fee laws can be complex, and we encourage you to send your specific tax or fee questions to us in writing. This will enable the California Department of Tax and Fee Administration to give you the best advice and will help protect you from tax, penalties, and interest in case the information turns out to be erroneous.
To request written advice, please complete and submit the General, Non-Confidential Tax Questions Form online. For more details on how to request written advice, please see publication 8, Get It in Writing!
If You Need Help
If you need assistance, see our How to Contact Us page.
If you have suggestions for improving this guide, please contact us via email.
If you operate a brewery and produce beer for sale, you must register for a seller's permit and file sales and use tax returns with the California Department of Tax and Fee Administration (CDTFA).
In addition to a seller's permit, you must register for an Alcoholic Beverage Tax account with the CDTFA if you are required to obtain any of the following licenses issued by the Department of Alcoholic Beverage Control (ABC):
- Beer Manufacturer (Type 01)
- A "beer manufacturer" means any person that has facilities and equipment for the purpose of, and is engaged in, the commercial manufacture of beer.
- Small Beer Manufacturer (Type 23)
- This license is designated for a brewery that produces less than 60,000 barrels per year.
- Beer and Wine Importer (Types 09 and 10)
- These licenses permit the holders to import and export beer and wine and are only issued to persons who hold another type of license which permits the sale of beer and wine for resale.
- Customs Broker (Type 15)
- "Customs broker" means any person who is authorized to act as an agent or broker for a person licensed as an importer for a person whose place of business is out of state, in regard to the importing of alcoholic beverages into the State in United States Internal Revenue bond or in United States Customs bond.
- Beer and Wine Wholesaler (Type 17)
- Pertains to beer and wine wholesalers generally (Requires a seller's permit only).
- Industrial Alcohol Dealer (Type 19)
- An industrial alcohol dealer sells alcohol for use in the trades, professions, and industries, but not for beverage use (Requires a seller's permit only).
- Out-of-state Beer Manufacturer Certificate (Type 26)
- This certificate authorizes the shipment of beer manufactured outside of California to licensed importers within the State.
- On-Sale General - Brew Pub (Type 75)
- Authorizes the sale of beer, wine and distilled spirits for consumption at a bona fide eating place (restaurant) and a limited amount of brewing of beer.
Additional information regarding alcoholic beverage licenses issued can be found on the Department of Alcoholic Beverage Control's website.
Interstate Alcoholic Beverage Transporter's Permit
Any carrier transporting alcoholic beverages into this state must apply for an Interstate Alcoholic Beverage Transporter's Permit issued by the CDTFA. Carriers include:
- Trucking company carrier
- Trucking contract carrier
- Freight forwarder
- Air carrier
Certain equipment purchases and leases by brewers may qualify for a partial exemption from sales and use tax. To see if your purchases qualify, please see our Manufacturing and Research & Development Exemption guide.
Certain purchases of farm equipment and machinery by qualified persons engaged in farming activity may be partially exempt from sales and use tax. To see if your purchases qualify, please see our Tax Guide for the Agricultural Industry.
Online Registration – Register with us for your seller's permit or add a business location to an existing account.
Sales & Use Tax Returns
Tax Return Filing Deadlines – Find your filing due dates.
File a Tax Return Online – CDTFA's online filing service is easy, fast, and free!
Online Payment Options – Make payments online for tax and fee programs.
Alcoholic Beverage Tax Returns & Reports
Alcoholic Beverage Tax account holders are required to file the applicable alcoholic beverage tax returns and reports and remit any amount of tax due on or before the 15th day of the month following the period covered by the return. For example, a return for the month of January 2017 would be due on or before February 15, 2017. A return must be filed regardless of whether any tax is due and/or if the return was not received in the mail.
- CDTFA-217, Common Carrier's Report of Delivery
- CDTFA-269-A, Beer and Wine Imported into California Report
- CDTFA-501-BM, Beer Manufacturer Tax Return
- CDTFA-501-BW, Beer and Wine Importer Tax Return
- CDTFA-1056, Vendor's Report of Beer Shipments into California
- CDTFA-1096, Customs Broker's Report of Transactions
Notice of Business Change
Keep your information current by using the links below and notifying us of any business changes.
This section provides guidance on the application of sales and use tax to ingredients and products used in the beer brewing process. Sales of ingredients and products to brewers may or may not be subject to tax, depending on whether they fall into one of the following categories:
- Food Products – Sales of food products intended for human consumption are not subject to sales and use tax. Therefore, ingredients used in the production of beer that are considered food products, such as grains, hops, and yeast are not subject to sales and use tax.
- Raw Materials – Sales and use tax does not apply to sales made to brewers of non-food products or ingredients that are purchased for incorporating into the finished product (beer) for sale.
- Manufacturing Aids – Sales and use tax applies to the sales of non-food products or ingredients that are purchased for use in manufacturing or producing the beer and not for the purpose of physically incorporating the item into the finished product.
Important Note: The application of sales and use tax for the ingredients and products listed on this page is based on their use in beer brewing as described in the Code of Federal Regulations (CFR), Section 25.15, Materials for the production of beer. If the actual use of a product or ingredient is different than its described category on this page, (as it aligns with CFR, Section25.15), then you may not rely upon the stated tax application for your purchases of the listed product or ingredient. Instead, you should contact the California Department of Tax and Fee Administration (CDTFA) for further guidance on the correct tax application regarding your specific use of the product or ingredient in question. Please visit our How to Contact Us page.
Food Products Are Not Subject to Sales and Use Tax
Sales of food products are not subject to sales and use tax when used to produce beer.
Examples of food products used in the production of beer:
- Grain of any kind
- Dry and liquid malt extracts
- Maple syrup
- Fruit juice
- Fruit concentrate
- Yeast and yeast products
- Enzymes (amylases, proteases, lipases, and cellulases)
Raw Materials or Ingredients Incorporated into Beer May Be Purchased for Resale
Brewers may purchase raw materials for resale (without the payment of tax) that become component parts of the finished product that will be resold.
Examples of non-food ingredients include those used in the brew to obviate cloudiness or to improve foaming qualities, and chemicals added to brew water to improve the taste of beer. These ingredients may be purchased for resale when the items are physically incorporated into the beer.
The following ingredients and products may be purchased for resale when incorporated into, and resold with, the finished product:
- Burton Salts
- Calcium Chloride
- Carbon Dioxide
- Century Special
- D & S Schaumade
- Gum Arabic
- Gypsum (Calcium Sulfate)
- Heading Powder
- Hydrated Lime
- KMS Crystals
- Lactic Acid
- Mitt Body Foam
- Nitrogen Gas
- Oak Chips or Particles
- P/L 104
- P/L 400
- Sodium Bisulfite
- Sulfuric Acid
- Tannic Acid
- Tartaric Acid
Please note, if the actual use of these products or ingredients is different than described above (as it aligns with CFR Section 25.15, Materials for the production of beer), you may not rely on the stated application of tax. Instead, you should contact the CDTFA for further guidance on the correct sales and use tax application regarding your specific use of the ingredient or product in question (How to Contact Us).
If you make beer for personal consumption, and do not intend to resell the beer you make, you may not purchase the above ingredients without sales and use tax. These ingredients may only be purchased without sales and use tax when they are intended to be incorporated into beer that will later be resold.
Purchases of Manufacturing or Processing Aids Are Subject to Sales and Use Tax
Sales and use tax applies to sales of products that are consumed in manufacturing beer and are not physically incorporated into the finished product. If property is purchased primarily as an aid in the manufacturing process, it is subject to sales and use tax, even though some portion may remain in the finished product.
Examples of manufacturing aids used to produce beer include:
- Products that stabilize color before fermentation.
- Chemicals that assist yeast during fermentation.
- Clarification or fining agents used to clarify beer (and typically filtered out of the product).
- Products that precipitate a chemical reaction during or after fermentation, prior to bottling or selling beer.
The sales of the following products to beer brewers when used as manufacturing aids are subject to sales and use tax:
- Activated Carbon
- Colloidal Clay
- Defoaming Agents
- Irish Moss
- Silicon Dioxide
- Talc Sierra Snow
Please note, if the actual use of these products or ingredients is different than described above (as it aligns with CFR Section 25.15, Materials for the production of beer), you may not rely on the stated application of sales and use tax. Instead, you should contact the CDTFA for further guidance on the correct sales and use tax application regarding your specific use of the ingredient or product in question (How to Contact Us).
Filing a Claim for Refund
If you believe you have paid tax in error on your purchases of ingredients or products used in beer brewing, you may be entitled to a refund of the overpaid sales and use tax.
A refund may generally be claimed at any time within the statute of limitations (generally three years). If you are seeking a refund for overpaid taxes on qualifying purchases of manufacturing or research and development equipment, the procedures are different depending on whether the original purchase was subject to sales tax or whether the original purchase was subject to use tax. The California Use Tax Information webpage provides more detailed information about use tax.
If the tax you paid was sales tax, you must request a refund from the retailer. The retailer would then file a claim for refund with the CDTFA. As the purchaser, you will need to provide the retailer with a completed resale certificate (CDTFA-230, General Resale Certificate, or similar form) and documented evidence that the original purchase should have qualified as raw material intended to be incorporated into the finished product. However, if the item on which you paid sales tax is a food product, a resale certificate is not necessary.
If the tax you paid was use tax (typically use tax applies when you purchase from an out-of-state vendor), you may file a claim for refund directly with the CDTFA. Simply complete form CDTFA-101, Claim for Refund or Credit, and mail it to the address provided. Indicate the reason for the refund is that the property purchased qualifies as a food product or raw material intended to be incorporated into the finished product.
If you paid sales or use tax on a manufacturing aid or other taxable property and subsequently resold it before making any use of it, you may take a deduction of the purchase price of the property on your sales and use tax return. You must take the deduction under the heading "Tax-paid purchases resold" on your return in the same period in which the sale of the property is included.
For more information on how to file a claim for refund, see publication 117, Filing a Claim for Refund.
Sales and Use Taxes in General
In California, all sales of tangible personal property are subject to sales and use tax, unless the law provides a specific exemption or exclusion. The law defines tangible personal property as any item that can be seen, weighed, measured, felt, or touched.
For beer manufacturers and distributors, most sales of beer are for resale to other licensees, authorized to sell beer. Manufacturers may have taxable sales of beer sold to consumers for consumption at a restaurant on the premises or at beer tastings events. However, manufacturers may also owe tax on sales of new or used equipment, gift items, glassware, accessories, and food intended to be served for consumption on their premises. Beer distributors may owe tax on sales of equipment.
Use tax is a companion to California's sales tax. It is due whenever you purchase taxable items from an out-of-state vendor for use in California without payment of California sales tax. You also owe use tax on items that you remove from your inventory and use in California if you did not pay tax when you purchased the items. To pay the use tax, report the purchase price of the taxable items under "Purchases Subject to Use Tax" on your sales and use tax return. Those purchases become part of the total amount that is subject to tax.
The statewide sales and use tax rate is 7.25%, effective January 1, 2017. In many areas of California, local jurisdictions have added district taxes that increase the tax owed by a seller. Sellers are required to report and pay the applicable district taxes for their taxable sales and purchases. If you need help identifying the correct rate, you may visit our Find a Sales and Use Tax Rate webpage.
Alcoholic Beverage Tax in General
The alcoholic beverage tax is a per-gallon excise tax collected on the sale, distribution, or importation of alcoholic beverages in California. The alcoholic beverage tax is in lieu of all county, municipal, and district taxes on the sale of beer, wine, and distilled spirits.
"Beer" means any alcoholic beverage created by the fermentation of any infusion or decoction of barley, malt, hops, or any other similar product, or any combination thereof in water, and includes ales, porters, stouts, lagers, small beers (e.g., Kombucha products with alcohol content of 0.5% or more by volume), and strong beers, but does not include sake, which is Japanese rice wine.
Generally, beer manufacturers and importers are required to pay the alcoholic beverage tax. If the tax has not been paid by beer manufacturers or importers, then the sellers of beer must pay it.
The current alcoholic beverage tax rate per gallon of beer is $0.20. Check our webpage Tax Rates – Alcoholic Beverage Tax for any changes in the tax rate.
If you operate a farm that grows hops or barley or that processes hops and malt, make sure you know about all of the tax-saving opportunities available to you. This section explains how sales and use tax applies to farm equipment and machinery, seed and plants, fertilizer, soil amendments, pesticides, and insecticides.
Retail sales of seeds and landscaping plants are generally taxable.
However, tax does not apply to the sale of seeds and plants if they will produce either of the following:
- Seeds, or products grown from them, that will be used as food for human consumption, such as hops.
- Plants that produce food for human consumption, such as fruits, grains, berries, or nuts.
Tax does not apply to the sale of fertilizer to be applied to land or used in foliar application to plants, provided the land and plants are used to produce food products (grains, hops, berries).
The description of the term fertilizer includes all of the following:
- Commercial fertilizers (as defined in section 14522 of the California Food and Agricultural Code)
- Agricultural minerals (as defined in section 14512 of the California Food and Agricultural Code)
- Cover crops that will be planted on the land and plowed underneath to fertilize that land
- Carbon dioxide
- Manure, which is considered to be:
- Waste from any domestic animal or fowl that is not artificially mixed with any material; or
- Domestic animal or fowl waste mixed only with materials used for preservation of the manure, or with materials used for bedding, sanitary, or feeding purposes for the animal or fowl.
Other retail sales of fertilizer and packaged soil amendments and substances are taxable.
Sales of pesticides and insecticides are taxable; however, when those materials are mixed with fertilizer, the portion of the sales price representing the price of the fertilizer is not taxable if the fertilizer is used in a tax-exempt manner.
In general, the sale of farm equipment and machinery is taxable; however, certain sales and purchases of farm equipment and machinery (including repair and replacement parts) are partially exempt from sales and use tax. As a farmer, you may be able to take advantage of this partial exemption.
Three requirements must be met for the partial exemption to apply. The item must be:
- Sold to a qualified person,
- Used exclusively or primarily (depending on the type of item) in producing and harvesting agricultural products. Primarily means at least 50 percent of the time, and
- Defined as farm equipment and machinery, which includes, but is not limited to, any tool, machine, equipment, appliance, device, or apparatus used in the conduct of agricultural operations.
If any of these three requirements are not met, the partial exemption will not apply.
The partial exemption applies only to the state general fund portion of the sales tax, currently 5.00 percent. To calculate the tax rate for qualifying transactions, subtract 5.00 percent from the sales tax rate that would normally apply at the location where the sale is made. For example, if the current tax rate in your area is 9 percent, the tax rate for a qualifying transaction would be 4.00 percent.
Note: The rate for the state general and fiscal recovery funds portion of the sales tax is subject to change. The rates in this example are for demonstrative purposes only. You must use the rate in effect at the time of the sale. Current rates can be found on our California City & County Sales & Use Tax Rates webpage.
Examples of farming equipment and machinery that may qualify:
- Planting and seeding equipment
- Crop-spraying equipment
- Harvesting equipment
- Trimming tools
- Solar power systems, under certain circumstances
- Irrigation equipment
If you lease rather than purchase farm equipment, you may still qualify for the partial tax exemption. For more information about leases, please see publication 46, Leasing Tangible Personal Property.
Mobile transportation equipment generally does not qualify for the partial exemption unless it is used exclusively in the conduct of agricultural operations and qualifies as an implement of husbandry under the California Vehicle Code. For a list of items that generally do not qualify for the farm equipment and machinery partial exemption, please see our Special Notice, Auto Part Retailers' Sales Generally Do Not Qualify for the Farm Equipment and Machinery Partial Exemption.
For more detailed information about equipment and machinery used in farming, see our Tax Guide for the Agricultural Industry.
If you are a beer manufacturer, this section provides information that will assist you in preparing returns and provide guidance on partial exemptions from sales and use tax on your eligible purchases of manufacturing equipment.
California breweries are required to complete and file a beer manufacturer tax return, each month including months with no activity.
You may file using form CDTFA-501-BM, Beer Manufacturer Tax Return. The return is due on or before the 15th day of the month following the reporting period. A return filed or payment made after the due date, regardless of whether any tax was due, will incur a penalty of $50 or 10% of the tax due, whichever is greater, plus any accrued interest.
In determining the alcoholic beverage tax due on the sale of beer in bottles or cans, the quantity sold shall be computed in accordance with the following table listed below.
|NUMBER OF BOTTLES
OR CANS PER CASE
|FLUID CONTENTS (Ounces)
OF EACH BOTTLE OR CAN
Each barrel of beer contains 31 gallons. Therefore, to determine the number of gallons to report on the CDTFA-501-BM, you will need to multiply the number of barrels sold by 31 gallons.
Because the determination of tax liability is based upon a count of cases of bottles or cans, only bottles or cans of uniform size and content may be packaged in the same case or shipping container.
If beer is to be packaged in cases of sizes other than those shown above, the beer manufacturer shall notify the CDTFA in advance and request to be advised of the proper fractional barrel equivalent for the proposed container.
If you produce beer for sale, you are considered a manufacturer and may qualify for a partial exemption of sales and use tax on certain manufacturing and research and development equipment purchases and leases.
To be eligible for this partial exemption, you must meet all three of these conditions:
- Be engaged in certain types of business, also known as a "qualified person,"
- Purchase "qualified property," and
- Use the property in a qualified manner.
Qualified persons are generally persons or establishments that are primarily engaged (at least 50 percent of the time) in manufacturing or research and development.
Qualified property generally includes:
- Machinery and equipment, including component parts and contrivances, such as belts, shafts, moving parts, and operating structures, used in manufacturing or research and development, and treated as having a useful life of one or more years for state income or franchise tax purposes.
- Equipment or devices used or required to operate, control, regulate, or maintain the machinery, including, but not limited to, computers, data-processing equipment, and computer software, together with all repair and replacement parts with a useful life of one or more years, whether purchased separately or in conjunction with a complete machine and regardless of whether the machine or component parts are assembled by the qualified person or another party.
- Special purpose buildings and foundations used as an integral part of the manufacturing, processing, refining, fabricating, or recycling process, or that constitute a research or storage facility used during those processes. Buildings used solely for warehousing purposes after completion of those processes are not included.
The tangible personal property must generally be used primarily (at least 50 percent of the time) in one of the following ways to qualify for this partial exemption:
- Research and development
- To maintain or repair any qualified tangible personal property described above
Some examples of beer manufacturing equipment that may qualify for a partial manufacturing exemption are brewing equipment, heating systems, bottling equipment, and fermentation tanks.
For more information on the partial manufacturing exemption, please visit our Manufacturing and Research & Development Equipment Exemption guide.
Sales and Distribution Topics
If you sell, ship, distribute, import, or export beer, you need to know your sales and use and alcoholic beverage tax obligations. This section contains information that may be helpful to you.
Sales and use tax does not apply to the sale of labels when sold to persons who affix them to nonreturnable containers of property to be sold (beer) or to returnable containers when a new label is affixed to the container each time it is refilled.
Examples are sales of labels to be affixed to fruit boxes, cans, bottles, and packing cases to growers, packers, bottlers, and others who place the contents in the containers.
Sales and use tax does not apply to the sale of the packaging materials when sold to persons who place the contents (beer) in the containers and sell the contents together with the containers.
Examples of packaging materials are:
- Wrapping materials
- Cardboard or plastic carriers
Sales and use tax applies to all other sales of containers, including beer kegs, purchased for use by the brewery or as returnable containers not for the purpose of resale.
Breweries are currently prohibited from shipping beer directly to California customers.
Only licensed wholesalers may distribute beer, and only licensed retailers can sell it to consumers. Please visit the Department of Alcoholic Beverage Control website for additional requirements.
Tax may apply to beer that is provided for tasting depending on whether a charge is made and where it is consumed.
Sales and Use Tax
If you charge a fee for beer tasting, you are considered the retailer of beer and sales tax applies to the beer tasting charges.
If you also sell food to pair with the beer, such as bread, crackers, cheeses, and other snacks, sales tax also applies to these sales. You may collect sales tax reimbursement from your customers on your beer and food sales as a separately stated charge, or you can include the tax in your beer or food charges; however, you must post a sign notifying your customers that the fee charged for beer tasting or food includes sales tax reimbursement. For more detailed information on sales tax reimbursement, see Regulation 1700, Reimbursement for Sales Tax.
If you do not charge a fee for beer tasting or food served to your customers, you are considered the consumer of the products used. You owe use tax on the cost of the taxable items that you purchased for resale and used to produce the beer that you let customers taste without charge. For example, if you are a brewer, you would owe use tax on items purchased for resale such as bottles, labels, and certain chemicals incorporated into the beer. If you purchased beer for resale, you owe use tax measured by the cost of the beer that you give away or self-consume. Use tax does not apply to the purchase price of the grains, hops, or any other food items served, because food products are generally exempt from tax. For more information regarding components of beer produced for human consumption, please see the Ingredients tab.
Alcoholic Beverage Tax
Beer manufactured by a brewery, for consumption in a brewery tavern, which is placed in a storage tank designed for this purpose, is subject to alcoholic beverage tax at the time it is placed in the storage tank. A "tavern" means a federally approved portion of the brewery premises where beer is sold to consumers.
Beer consumed by brewery employees, visitors, and others is not subject to the alcoholic beverage tax if consumed without charge, within the brewery's bonded premises, and not in a brewery tavern.
Samples and donations of beer shall be reported as sales and are subject to California's alcoholic beverage tax.
Each transfer of samples, between licensees authorized to possess alcoholic beverages (manufacturers, manufacturers' agents, distilled spirits wholesalers and rectifiers), on which the California alcoholic beverages taxes have not been paid, should be on an ex-tax basis, and recorded on an invoice marked "Samples."
For sales and use tax purposes, if you do not charge a fee for your samples, you are considered the consumer of the products used. You owe use tax on the cost of the taxable items that you purchased for resale and used to produce the beer that you let customers taste without charge. For example, if you are a brewer, you would owe use tax on items purchased for resale such as bottles, labels, and certain chemicals incorporated into the beer. If you purchased beer for resale, you owe use tax measured by the cost of the beer that you give away or self-consume. Use tax does not apply to the purchase price of the grains, hops, or any other food items served, because food products are generally exempt from tax. For more information regarding components of beer produced for human consumption, please see the Ingredients tab.
Whether beer that is imported is subject to tax depends on if it is for commercial or personal use, among other factors.
All beer imported into California by a beer manufacturer or importer is presumed to be sold, and the alcoholic beverage tax is due when it is received by the licensee. You can rebut this presumption if you can show that the beer:
- Is still in the possession of the beer manufacturer in internal revenue bond within this state; or
- Has been exported from this state by the licensee making the report, or has been sold by the licensee for export and was actually exported from this state.
As a beer importer, you must keep purchase invoices and a record of all shipments of beer received from a point outside of California on form CDTFA-269-A, Beer and Wine Imported into California. A beer manufacturer holding both a beer manufacturer's license and a beer and wine importer's license must also include the total imports of beer on the CDTFA-501-BM, Beer Manufacturer Tax Return.
Adults who bring alcoholic beverages into California for personal or household use do not need an alcoholic beverage license; however, some restrictions do apply. For specific information on importing alcoholic beverages for personal use and the allowable amounts, visit the Department of Alcoholic Beverage Control's (ABC) website. There you will find information on the following topics:
- Returning from a Foreign Country (see the United States Customs and Border Protection website for any federal requirements)
- New California Residents
- Out-of-State Residents Traveling Through California
- Military Personnel
- Foreign Diplomats
See section 23661, Who may import, of the Business and Professions Code for more information.
If you purchase alcoholic beverages from outside the state for personal use, you are required to report and pay use tax directly to the CDTFA. For information regarding California use tax, visit our California Use Tax Information webpage.
Beer sold for export and actually exported is exempt from the alcoholic beverage tax.
To grant the exemption from the alcoholic beverage tax, one or more of the following conditions must be met:
- The beverages are delivered to an armed force of the United States, at a depot of the armed force in this state, for transport out of the state, and the taxpayer's record of the sale is supported by a copy of the official purchase order and the documented evidence of export.
- The beverages are shipped to a point in a foreign country, and the federal tax on alcoholic beverages is not imposed or is refunded.
- The beverages are shipped to a point outside this state by a carrier who is independent of the buyer and the seller, and the claim for tax exemption is supported by a copy of the shipping documents receipted by the carrier. "Carrier" means a person or firm regularly engaged in the business of transporting for compensation property owned by other persons.
- The beverages are shipped to or delivered to a point outside this state by any means, and the claim for tax exemption is supported by documentation signed by the purchaser and containing the certificate of the appropriate liquor control or tax authority of the state in which the beverages have been delivered, to the effect that receipt of the delivery of the beverages has been reported to such authority by the purchaser.
Sales of beer by licensed retailers to customers outside of California are generally considered exempt sales in interstate and foreign commerce and are not subject to sales tax. You must keep documentation, such as a bill of lading, to show that the distilled spirits, beer, or wine was shipped out of California, directly to your customer.
Sales Which Are Not Exports
Alcoholic beverages on which federal excise taxes have been paid, and which are sold to persons operating commercial fishing boats or private carrier freight vessels, for use as ships' stores outside of the state, upon the high seas, are not exports and are subject to the alcoholic beverage tax.
Beer Transactions Exempt from the Alcoholic Beverage Tax
- Beer consumed by employees of a manufacturer upon the premises of the manufacturer.
- Beer sold or delivered in internal revenue bond to another beer manufacturer in this State.
- Beer in continuous transit through this State in the possession or custody of common carriers.
- Sales of beer to certain commercial carriers of persons when beverages will be used on their facilities outside California.
- Beer sold for export and actually exported.
You are required by law to keep business records, in order to properly report and pay the applicable taxes. This section will explain what type of records you need to keep, as well as how long you must keep them for sales and use tax and alcoholic beverage tax purposes.
Accurate record keeping will help you keep track of your sales and purchases and assist you when preparing your required tax returns and reports. These records must be maintained for 4 (four) years, unless otherwise directed by the CDTFA. If you do not maintain records, it may be considered evidence of negligence or intent to evade the tax and may result in penalties.
Examples of records you must keep include:
- Sales Invoices
- Cash Register Tapes
- Sales Journals
- Resale Certificates
- Shipping Documents
- Purchase Invoices
- Bank Records
- Purchase Orders
- Purchase Journals
- Tax Returns
Every beer manufacturer, importer, and wholesaler must keep records of all beer produced, received by bottling, canning, or cooperage departments, packaged, purchased, or sold.
You must maintain invoices for all sales and purchases of alcoholic beverages.
Each invoice covering the sale or purchase of alcoholic beverages:
- Must not be commingled with invoices covering commodities other than alcoholic beverages;
- Must be marked or stamped "Sold for export" if sold for export;
- Must be marked or stamped "No State tax—not for beverage use" if sold for use in trades, professions, or industries, and not for beverage use;
- Covering imports or bulk transfers of beer to U.S. Internal Revenue bond by a brewer to another brewer must also show that delivery was made "in bond;" and
- Must show all of the following:
- The name and address of the purchaser;
- Date of sale or purchase and invoice number;
- Kind, quantity, size, and capacity of packages of beer sold or purchased;
- The cost to the purchaser together with container charges and any discount which at any time is to be given on or from the price as shown on the invoice;
- The place from which delivery of the alcoholic beverages was made unless delivery was made from the premises of the licensee or from a public warehouse located in the same county.
In addition to the general requirements described above, if you are a beer manufacturer, wholesaler, or importer, your records must show:
|Breweries/ Beer Manufacturers||
|Importers of Beer||
|Out-of-State Beer Vendors||
Every sale or delivery of beer from one licensee to another licensee must be recorded on a sales invoice, whether or not consideration is involved.
For more detailed information on books and records, please see our Keeping Records webpage.
If you are a licensed beer manufacturer, you need to take a monthly physical inventory of all bulk and bottled beer in the brewery bottling house.
You should keep all records used in preparing inventories for certification at your premises to be readily accessible for examination by CDTFA employees.
Losses and Allowances
If you are a licensed business and incur any of the following described losses, the CDTFA will refund you an amount equal to the state alcoholic beverage tax included in the sales price of the beverages.
A refund may be obtained from the CDTFA for the alcoholic beverage tax for losses resulting from disaster, vandalism, malicious mischief, or insurrection.
To obtain a refund from the CDTFA for the alcoholic beverage tax, all of the following conditions must be met:
- The beverages are lost, rendered unmarketable, or condemned by a duly authorized official by reason of fire, flood, casualty, or other disaster, or by reason of breakage, destruction, or other damage resulting from vandalism, malicious mischief, or insurrection.
- The beverages were held and intended for sale at the time of the disaster or other damage.
- The disaster or damage occurred in this state.
- The licensee has not, and will not, be compensated by insurance, or otherwise, for the loss in the amount of the tax included in the purchase price paid for the beverages.
- The amount to be refunded with respect to a single disaster or other loss is two hundred fifty dollars ($250) or more.
- A claim for refund is filed with the CDTFA within six months after the date on which the beverages were lost, rendered unmarketable, or condemned by a duly authorized official.
The CDTFA will not pay interest on the amount of alcoholic beverage taxes refunded. Losses resulting from theft do not qualify for a refund of the sales tax, because the products were not sold and sales tax was not collected. The alcoholic beverage tax is not refundable in the case of theft per Regulation 2553, Losses Resulting from Disaster, Vandalism, Malicious Mischief, or Insurrection.
A beer importer is allowed an alcoholic beverage tax credit for beer sold and subsequently returned as spoiled, when the spoiled beer is destroyed under the supervision of a representative of the CDTFA. For small quantities of beer destroyed in the amount of 2,500 gallons or less, which are not supervised by a CDTFA representative, the exemption or credit is allowed only after prior written approval is obtained from the CDTFA.
To secure prior written approval, the beer importer must submit a written request to the CDTFA, listing the type of beverage, the number of containers, the container sizes, and the total gallons to be destroyed.
After receiving approval from the CDTFA and after destroying the beer, the beer importer must submit a declaration signed under penalty of perjury, listing the number of containers, the container sizes, the total gallons destroyed, and the date and manner of destruction. The declaration must be signed by a person of authority in the importer's organization who witnessed the destruction of the beer.
Effective January 1, 2017, it becomes illegal to possess, purchase, sell, offer to sell, distribute, manufacture, or use powdered alcohol.
Starting January 1, 2017, the California Department of Alcoholic Beverage Control is required to revoke or suspend your alcoholic beverage license if you offer for sale, manufacture, or distribute powered alcohol. Violators will be guilty of an infraction, punishable by a fine of not more than five hundred dollars ($500).
- Tax Guide for the Agricultural Industry
- Tax Guide for the Manufacturing and Research & Development Equipment Exemption
Laws and Regulations
- Alcoholic Beverage Tax Law
- Alcoholic Beverage Tax Regulations
- Business and Professions Code Section 23000-23047 Alcoholic Beverage Control Act
- RTC Section 6356.5, Farm Equipment and Machinery
- RTC Section 6357.1, Diesel fuel; farming business
- RTC Section 6359, Food Products
- RTC Section 6377.1, Manufacturing and Research & Development Equipment
- Regulation 1525.4, Manufacturing and Research & Development Equipment
- Regulation 1533.1, Farm Equipment and Machinery
- Regulation 1533.2, Diesel Fuel Used in Farming Activities or Food Processing
- Regulation 1589, Containers and Labels
- Regulation 1602, Food Products
- Regulation 1603, Taxable Sales of Food Products
- Regulation 2552, Spoiled Beer and Wine
- Regulation 2553, Losses Resulting From Disaster, Vandalism, Malicious Mischief, or Insurrection
NAICS – North American Industry Classification System
The Census Bureau is the official US Government Authority that manages the NAICS Coding System. Go to the 2012 NAICS search tool to determine your NAICS code.
Returns, Reports, and Forms
- CDTFA-1096, Customs Broker's Report of Transactions
- CDTFA-217, Common Carrier's Report of Delivery
- CDTFA-269-A, Beer and Wine Imported into California Report
- CDTFA-501-BW, Beer and Wine Importer Tax Return
Partial Exemption Certificates
- CDTFA-230-M Partial Exemption Certificate for Manufacturing, Research and Development Equipment.
- CDTFA-230-G Partial Exemption Certificate for Qualified Sales and Purchases of Diesel and Farm Equipment and Machinery
- CDTFA-608 Certificate of Farming Use (to support your diesel fuel vendor's claim for a credit, payment, or refund under section 60502 of the Revenue and Taxation Code)
- CDTFA-230-N Exemption Certificate for Qualified Sales and Purchases of Liquefied Petroleum Gas
- Publication 22, Dining and Beverage Industry
- Publication 66, Agricultural Industry
- Publication 92, Alcoholic Beverage Tax
- Publication 541, Manufacturing and Research & Development Exemption
Other Helpful Resources
- CDTFA Online Services – Learn about the online services the CDTFA offers, including online registration for all permits, licenses, and accounts we administer.
- Verify a Permit, License, or Account – You can use this to verify a seller's permit, Cigarette and Tobacco product retailer license, eWaste account, or Underground Storage Tank Maintenance Fee Account.
- Sign Up for CDTFA Updates – Subscribe to our email lists and receive the latest news, newsletters, tax and fee updates, public meeting agendas, and other announcements.
- Videos and How-To Guides – These resources will help you avoid common mistakes, file your tax returns online, and more.
- City and County Tax Rates – A listing of current and historical tax rates.
- Find Your Tax Rate – You can look up the current sales and use tax rate for a specific address.
- Tax and Fee Rates – You can look up current and past alcoholic beverage tax rates, as well as rates for other special taxes and fees administered by the CDTFA.
- Special Notices – CDTFA special notices are issued whenever there is a change in laws, tax rates, or CDTFA procedures.
- Get It in Writing! – Our tax and fee laws can be complex, and you are encouraged to put your tax questions in writing.
- Contact Us – A listing of CDTFA contacts for your questions and concerns.
- CDTFA Offices – A comprehensive listing of all CDTFA offices and contact information.
- Taxpayers' Rights Advocate (TRA) – The TRA Office helps taxpayers when they are unable to resolve a matter through normal channels (for example by speaking to a supervisor), when they want information regarding procedures relating to a particular set of circumstances, or when there are apparent rights violations.
- Department of Alcoholic Beverage Control (ABC) – Provides helpful information for businesses requiring ABC licenses.
- Alcohol and Tobacco Tax and Trade Bureau (TTB) – Provides information and documents for beer producers, importers, exporters, and wholesalers regarding alcohol permitting, labeling, and marketing requirements.