Sales Tax Guide for Winemakers
New Information
Beginning January 1, 2023 there are several changes to the Alcoholic Beverage Tax Program (Senate Bill 518 [Stats. 2022, ch. 702]), including:
- All alcoholic beverage account holders are required to file online.
- Any information contained in winegrower returns and supplemental schedules filed on or after January 1, 2023, shall be made public upon request, including names and addresses except the names and addresses of natural persons.
- Taxpayers may elect to prohibit the disclosure of the information contained in their winegrower return and schedules. The winegrower return will be updated to include a designated checkbox where the taxpayer may elect to prohibit disclosure.
Please continue to check back for more updates to our website. We will send notices to affected account holders soon.
California is the largest wine producing state in the United States and is the fourth largest wine producer in the world. We recognize that understanding and dealing with tax issues related to your industry can be time-consuming. We want to help you get the information you need so that you can spend more time focusing on your business.
To help you better understand your sales, use, and alcoholic beverage tax obligations, we have created this guide with topics important to your business.
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 information you need.
The Ingredients section provides guidance on the tax application to purchases of many items used in winemaking.
The Industry Topics section covers many topics in an at-a-glance format which can be expanded to show more extensive information.
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 is general in nature and is not intended to replace any law or regulation. Our tax and fee laws can be complex. If you have specific questions about the information in this guide, we recommend that you get answers from us in writing. This enables us to give you the best advice and may help protect you from owing tax, penalties, and interest in case we give you erroneous information.
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 at any time you need assistance with topics included in this guide – or with topics not included – feel free to contact us by telephone or email. Contact information and hours of operation are available in the Resources section.
If you have suggestions for improving this guide, please contact us via email.
If you make and sell wine, 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 us if you are required to obtain any of the following licenses issued by the Department of Alcoholic Beverage Control (ABC). After you apply with ABC, we will notify you of which alcoholic beverage tax account type you are required to register for with us.
- Winegrower (Type 02)—"Winegrower" means any person who has facilities and equipment for the conversion of grapes, berries or other fruit into wine and is engaged in the production of wine.
- Wine Rectifier (Type 08)—This license authorizes the holder to cut, blend, rectify, mix, flavor and color wine. A wine rectifier may only deal in "tax-paid" wine.
- Beer and Wine Importer (Types 09 and 10)—These licenses permit the holder to import and export alcoholic beverages 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)—This licensee is generally located near the dock area in seaports or at international airports. "Customs broker" means any person who is authorized to act as an agent or broker for a person licensed as an importer or for a person whose place of business is out of California, in regard to the importing of alcoholic beverages into California under United States internal revenue bond or in United States customs bond.
- Beer and Wine Wholesaler (Type 17)—This license permits incidental sales to other supplier-type licensees. The Type 17 does not have an alcoholic beverage tax account registration requirement. However, it is typically issued in conjunction with a Type 09 (Beer and Wine Importer).
- 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).
- Wine Blender (Type 22)—A wine blender is a person authorized to operate a bonded wine cellar pursuant to a federal basic permit issued by the Alcohol and Tobacco Tax and Trade Bureau (TTB) who does not have facilities or equipment for the conversion of fruit into wine and does not engage in the production of wine.
- Wine Direct Shipper Permit (Type 82)—This permit authorizes winegrowers located in other states to sell and ship wine directly to residents of California who are at least 21 years of age for their personal use and not for resale.
For more information about alcoholic beverage licenses, please visit ABC's website.
Interstate Alcoholic Beverage Transporter's Permit
Before transporting shipments of alcoholic beverages into California, you must register with us and apply for an interstate alcoholic beverage transporter's permit if you are a:
- Common carrier (including trucking company carriers and air carriers, but excluding railroad and steamship companies)
- Out-of-state wine manufacturer or producer
The permit, once issued, is valid until revoked by us.
Registration
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—File online with us. The service is easy, fast, and free!
- Online Payment Options—Make payments online for tax and fee programs.
Equipment Exemption
Certain equipment purchases and leases by wine manufacturers may qualify for a partial exemption from sales and use tax. To see if your purchases qualify, please see our Tax Guide for Manufacturing and Research & Development Equipment Exemption.
Certain purchases of farm equipment and machinery by qualified persons engaged in agricultural activity may be partially exempt from from sales and use tax. To see if your purchases qualify, please see our Tax Guide for Agricultural Industry.
Alcoholic Beverage Tax Returns & Reports
Alcoholic beverage tax account holders are required to file the applicable alcoholic beverage tax returns, supplemental schedules, and reports in addition to their sales and use tax returns. In general, most alcoholic beverage tax returns, schedules, or reports are due on or before the 15th of the month following the period covered by the tax return, schedule, or report. For example, a return for January is due on or before February 15. However, some returns, schedules, or reports have different filing requirements. Be sure to follow the return, schedule, or report instructions for filing requirements.
You must file a return, schedule, or report even if you do not owe tax or have no activity for the reporting period. Tax returns filed after the due date are subject to a late penalty regardless of whether any tax is due. The penalty for filing a late alcoholic beverage return is 10 percent of the tax due or $50, whichever is greater.
All alcoholic beverage tax returns must be filed online, and supplemental schedules and reports are eligible to be filed online. We have developed Microsoft Excel templates to help you file your alcoholic beverage supplemental schedules and reports using our online services system. To obtain these Excel templates, please see the Online Filing tab in our Tax Guide for Alcoholic Beverage. You will be able to attach (upload) the completed Excel file when you file your return or report online.
Wine Forms:
- CDTFA-217, Common Carrier's Report of Delivery
- CDTFA-269-BW, Beer and Wine Imported into California
- CDTFA-269-WG, Wine Imported into California
- Beer and Wine Importer Tax Return
- Winegrower Tax Return
- CDTFA-1096, Customs Broker's Report of Transactions
Notice of Business Change
Go to www.cdtfa.ca.gov and log in with your username and password to update your account information when you sell your business, close your business, or change your mailing address, email address, or telephone number. If you prefer, you may use the links below to obtain the forms to notify us of changes. It is important to notify us so we can ensure you receive timely information, email reminders to electronically file, and other important updates.
You may also contact our Customer Service Center at 1-800-400-7115 (CRS:711) and select the option for Special Taxes and Fees or send a message through our website using our General, Non-Confidential Tax Questions Form.
This section provides guidance on the application of tax to ingredients and products used in the winemaking process. Sales of ingredients and products to winemakers 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 tax. Therefore, ingredients used in winemaking such as grapes, berries, and yeast are food products for human consumption and these sales are not subject to tax.
- Raw Materials – Tax does not apply to sales of non-food products or ingredients to winemakers that are purchased for incorporating into the finished product (wine).
- Manufacturing Aids – Tax applies to the sales of non-food products or ingredients that are purchased for use in manufacturing or producing the wine and not for the purpose of physically incorporating the item into the finished product.
Important Note: The application of tax for the ingredients and products listed on this page is based on their use in winemaking as described in the Code of Federal Regulations (CFR), Section 24.246, Materials authorized for the treatment of wine and juice. If the actual use of a product or ingredient is different than its described category on this page, (as it aligns with Section 24.246 of the CFR), then the stated tax application for your purchases of the listed ingredient or product may be different and you should contact us for further guidance on the correct tax application regarding your specific use of the ingredient or product in question. Please visit our How to Contact Us page.
Open All Close AllFood Products Are Not Subject to Tax
Sales of food products are generally not subject to tax when used to produce wine.
Examples of food products used to produce wine include:
- Albumen
- Autolyzed yeast
- Bakers yeast mannoprotein
- Carbohydrase
- Casein (a milk product)
- Catalase
- Cellulase
- Enzymes
- Gelatin
- Glucose oxidase
- Lysozyme
- Milk products
- Pectinase
- Protease
- Soy flour
- Urease
- Yeast
Raw Materials or Ingredients Incorporated into Wine May Be Purchased for Resale
Winemakers may purchase raw materials for resale (without the payment of tax) that become a component part of the finished product that will be resold.
Examples include ingredients used to stabilize wine, increase the body and astringency of the wine, and to sterilize or preserve the wine.
The following ingredients and products may generally be purchased for resale when incorporated into, and resold with, the finished product:
- Acacia (gum arabic)
- Ascorbic acid
- Calcium carbonate
- Calcium sulfate
- Carbon dioxide
- Citric acid
- Dimethyl dicarbonate
- Ethyl maltol
- Fumaric acid
- Lactic acid
- Malic acid
- Malolactic bacteria
- Maltol
- Nitrogen gas
- Oak chips or particles
- Potassium bicarbonate
- Potassium bitartrate
- Potassium carbonate
- Potassium citrate
- Potassium metabisulfite
- Potassium salt of sorbic acid
- Scorbic acid
- Sodium carboxymethyl cellulose
- Sulfur dioxide
- Synthetic tartaric acid
- Tannin
- Tartaric acid
Please note, if the actual use of these products or ingredients is different than described above (as it aligns with Section 24.246 of CFR), the stated application of tax may be different and you should contact us for further guidance on the correct tax application regarding your specific use of the ingredient or product in question (How to Contact Us).
If you make wine for personal consumption, and do not intend to resell the wine you make, you may not purchase the above ingredients without tax. These ingredients may only be purchased without tax when they are intended to be incorporated into wine that will later be resold.
Purchases of Manufacturing or Processing Aids Are Subject to Tax
Tax generally applies to sales of products that are consumed in manufacturing wine 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 tax even though some portion may remain in the finished product.
Examples of manufacturing aids used to produce wine include:
- Products that stabilize juice color before it is fermented into wine
- Chemicals that assist yeast during fermentation
- Fining agents to clarify wine (and typically filtered out of product)
- Products that precipitate a chemical reaction during or after fermentation, prior to bottling or selling wine.
The sales of the following products to winemakers when used as manufacturing aids are subject to tax:
- Acetaldehyde
- Activated carbon
- Aluminosilicates
- Ammonium phosphate
- Biotin
- Calcium pantothenate
- Copper sulfate
- Chitosan
- Defoaming agents
- Ferrocyanide compounds
- Ferrous sulfate
- Folic acid
- Granular cork
- Inositol
- Isinglass
- Magnesium sulfate
- Niacin
- Polyvinylpolypyrrolidone
- Pyridoxine
- Silica gel
- Thiamine hydrochloride
Please note, if the actual use of these products or ingredients is different than described above (as it aligns with Section 24.246 of CFR), the stated application of tax may be different and you should contact us for further guidance on the correct 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 winemaking, you may be entitled to a refund of the overpaid tax.
A refund may generally be claimed at any time within the statute of limitations (generally, within three years). If you are seeking a refund for overpaid taxes on purchases the procedures are different depending on whether the original purchase was subject to sales tax versus 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 California Department of Tax and Fee Administration (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 documentary 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 is 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. Include as the reason for the refund 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 resell 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.
The Basics
Sales and Use Taxes in General
All retail sales of tangible personal property in California are subject to sales tax unless the law provides a specific exemption or exclusion. The law defines a retail sale as a sale for a purpose other than resale in the regular course of business in the form of tangible personal property.
For winemakers and distributors, most sales of wine are for resale to other licensees who are authorized to sell wine. Winemakers or distributors that do make retail sales in California of wine or other items, such as new or used equipment, gift items, glassware, and accessories, generally owe sales tax on their sales. Sales of food intended for consumption on their premises are also taxable.
Use tax is a companion to California sales tax, which applies to the use of property in California purchased from a retailer. For example, you may owe use tax when you purchase tangible personal property from an out-of-state vendor or foreign vendor for use in California, without payment of tax. You may also owe use tax on property that you purchase for resale without payment of tax but then remove from your resale inventory to use in California. 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 percent. In many areas of California, local jurisdictions have added district taxes that increase the applicable tax rate. To find the tax rate for an address or location, please visit our Find a Sales and Use Tax Rate webpage and enter the address as prompted.
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 county, municipal, and district taxes on the sale of beer, wine, and distilled spirits.
Generally, winegrowers or importers are required to pay the alcoholic beverage tax. If the tax has not been paid by the winegrowers or importers, then the wine sellers must pay it. Wine is presumed to be sold, and the alcoholic beverage tax is due, when it leaves a manufacturer's facility or is removed from internal revenue bond.
The current alcoholic beverage tax rate per gallon of wine is $0.20. Check the Tax Rates – Alcoholic Beverage Tax for any changes in the tax rate.
Conversion of Liters to Wine Gallons
You are required to file California returns and reports for wine in “wine gallons.” A wine gallon is the same as a regular gallon = 231 cubic inches or 128 ounces.
The Federal Alcohol and Tobacco Tax and Trade Bureau (TTB) authorizes the bottling of wine and distilled spirits in standard metric sizes; however, you must file all California returns and reports in wine gallons. A “wine gallon” is the same as a regular gallon, meaning 231 cubic inches or 128 ounces. To convert liters to wine gallons for reporting purposes, you must use the standards established by TTB.
To convert liters to wine gallons, multiply the quantity in liters by 0.264172, rounded to the nearest one-hundredth (second decimal) of a gallon.
See Revenue and Taxation Code section 32452.1 and Regulation 2544, Conversion of Liters to Gallons, for more information.
Agricultural Topics
If you are in the business of cultivating, operating, or managing a vineyard, make sure you know about the tax-saving opportunities that may be available to you. This section explains how sales and use tax and exemptions generally apply to farm equipment and machinery, diesel fuel used in farming or food processing, seeds and plants, fertilizer, soil amendments, pesticides, insecticides, and manufacturing equipment.
Open All Close AllPartial Exemption for Farm Equipment and Machinery
In general, the sale of farm equipment and machinery is subject to sales and use tax. 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 winegrower, you may qualify for this partial exemption.
The partial exemption applies only to the state's General Fund and Local Revenue Fund 2011 portion of the sales tax, currently 5 percent.
Three requirements defined in Regulation 1533.1 must be met for the partial exemption from sales and use to apply. The item must be:
- Purchased by 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 any tool, machine, equipment, appliance, device, or apparatus used in the conduct of agricultural operations.
If any one of these three requirements is not met, the partial exemption from sales and use tax will not apply.
Examples of farm equipment and machinery that may qualify include:
- Planting and seeding equipment
- Crop-spraying equipment
- Harvesting equipment
- Tractors
- Balers
- 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 sales and use 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 information about this partial exemption and other exemptions available for farming, please see our Tax Guide for Agricultural Industry and look under the Farming Exemptions tab.
Diesel Fuel Used in Farming or Food Processing
Most sales and/or purchases of diesel fuel are subject to sales and use tax. However, a partial sales and use tax exemption exists for certain sales and purchases of diesel fuel used in farming activities or food processing.
For information on when the partial exemption applies to the sale or purchase of diesel fuel used in farming activities or food processing, please see our Tax Guide for Agricultural Industry, look under the Farming Exemptions tab, and go to the Diesel Fuel Used in Farming or Food Processing topic.
Seeds and Plants (rootlings, rootings, and root stock)
Retail sales of seeds and landscaping plants are generally taxable.
However, sales and use tax does not apply to the sale of seeds and plants when:
- The seeds, or the products grown from them, will be used as food for human consumption; or
- The plants will produce food for human consumption, such as fruit (including grapes), grains, berries, or nuts.
For more information, please see Regulation 1588, Seeds, Plants and Fertilizer.
Fertilizer, Soil Amendments, Pesticides, and Insecticides
Sales and use tax does not apply to the sale of fertilizer to be applied to land or used in foliar application to plants, provided the land is used to produce food products (grapes).
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; and
- 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 (as defined in section 14552 of the California Food and Agricultural Code) and auxiliary soils and plant substances (as defined in section 14513 of the California Food and Agricultural Code) 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.
For more information, please see Regulation 1588, Seeds, Plants and Fertilizer.
Manufacturing and Research & Development Topics
Manufacturers and certain research and developers may qualify for a partial exemption of sales and use tax on certain manufacturing and research and development equipment purchases and leases.
Manufacturing and Research & Development Partial Exemption
To be eligible for this partial exemption of sales and use tax, you must meet all three of these conditions:
- Be engaged in certain types of business, also known as a "qualified person,"
- Purchase "qualified tangible personal property," and
- Use the property in a qualified manner.
A "qualified person" generally means a person who is primarily engaged (50 percent or more of the time) in those lines of business described in the North American Industry Classification System (NAICS) Codes 3111 to 3399, inclusive, 541711, or 541712. These lines of business generally include manufacturing business activities, and research and development business activities. A qualified person may be primarily engaged either as a legal entity or as an establishment within a legal entity in a qualifying line of business.
If you operate a winery, you may be considered a qualified person if you are primarily engaged in the production of wine.
Qualified tangible personal 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.
- Tangible personal property used in pollution control that meets or exceeds standards established by California or any local or regional governmental agency within California at the time the qualified tangible personal property is purchased.
- 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 50 percent or more of the time in qualifying manner. The following activities are generally considered qualifying uses of the property:
- Primarily used in any stage of the manufacturing, processing, refining, fabricating, or recycling of tangible personal property;
- Primarily used in research and development;
- Primarily used to maintain or repair any qualified tangible personal property described above; and
- Property used by a construction contractor purchasing that property for use in the construction of 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.
Some examples of winery equipment that may qualify for a partial manufacturing exemption are grape crushers, de-stemmers, presses, bottling equipment, and fermentation tanks.
For more information on the partial manufacturing exemption, please visit our Tax Guide for Manufacturing and Research & Development Equipment Exemption.
Oak Barrels
New, used, or re-coopered oak barrels and oak chips, purchased for the purpose of incorporating flavor elements derived from the oak into the wine, may be purchased for resale by winemakers who will resell the wine.
As the winemaker, you can provide a CDTFA-230, General Resale Certificate, to your vendor when purchasing oak barrels and/or oak chips.
Sales and Distribution Topics
If you sell, ship, distribute, import, or export wine, you need to know your sales and use and alcoholic beverage taxes obligations. This section contains information that may be helpful to you.
Packaging Material
Sales and use tax does not apply to the sale of packaging materials when sold to persons who place the contents (wine) in the containers and sell the contents together with the containers.
Examples of packaging materials are bottles, cans, barrels, wrapping materials, twines, bags, cartons, and pallets.
Wine Labels
Sales and use tax generally does not apply to the sale of labels when sold to persons who affix them to nonreturnable containers of property to be sold (wine) 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, made to growers, packers, bottlers and others who place the contents in the containers.
Shipping Wine
Before sending any shipment of wine to a California resident, you must have a license or permit issued by the Department of Alcoholic Beverage Control (ABC). Please visit ABC’s website for additional requirements and information.
A California winegrower licensee (ABC license type 2) who sells and ships wine directly to California customers must obtain a sales and use tax permit.
Out-of-state wine direct shipper is required to register with us and pay the alcoholic beverage tax as if they were a California winegrower.
If you sell and make shipments of wine directly to consumers in California, such sales are retail sales and you must report all applicable sales and use tax to us, in addition to the alcoholic beverage tax. (Business and Professions Code Section 23661.3)
If you sell and ship wine to customers outside California, the sales are exempt sales in interstate commerce and are not subject to California sales tax. You must keep documentation, such as a bill of lading, to show that the wine was shipped out of California directly to your customer. The amount of wine would also be exempt from the alcoholic beverage tax since it is sold for export and actually exported.
Example
You operate a small winery located in the State of Washington that will make direct shipments of wine to your customers in California. You are required to obtain all of the following:
- A wine direct shipper permit from ABC (license type 82).
- A seller's permit from us to file sales and use tax returns with us.
- A winegrower/wine direct shipper account from us to file winegrower returns with us.
- We will send you a request for registration shortly after you apply for the wine direct shipper permit with ABC.
Wine Tasting and Self-Consumption
If you charge a fee for wine tasting, you are considered a retailer of wine and sales tax applies to the wine tasting charges.
If you also sell food during wine tastings, such as cheese, crackers, and smoked salmon, tax also applies to these sales. You may collect sales tax reimbursement from your customers on your wine and food sales as a separately stated charge. Or, you can include the tax in your wine and food charges; however, you must post a sign notifying your customers that the fee charged for wine tasting or food includes sales tax reimbursement. For more information on sales tax reimbursement, please see Regulation 1700, Reimbursement for Sales Tax.
If you do not charge a fee for wine 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 wine, which you let customers taste without charge. For example, if you are a winemaker, you would owe use tax on items purchased for resale, such as bottles, corks, labels, and certain chemicals incorporated into the wine. If you purchased wine for resale, you owe use tax measured by the cost of the wine that you give away or self-consume. However, use tax does not apply to the purchase price of the grapes because they are food products, the sales of which are exempt from tax. For more information regarding components of wine produced for human consumption, please see the Ingredients tab.
In addition to the sales and/or use tax, wine is presumed to be sold and subject to alcohol and beverage tax when it is removed from internal revenue bond (non-tax paid wine).
Facility Fees for Events at Winery
If you contract to provide and serve food or beverages at your winery for a customer's event, such as a wedding, birthday party, or retirement party, in general, your charge for use of the winery (facility) is subject to tax.
In general, when you contract to provide and serve food or beverages for an event at the winery and the primary purpose of the winery is to serve the food or beverage at the event, your charge for use of the winery is taxable, even if separately stated. You are considered to be functioning as a restaurant and the charge for the use of the winery is part of the sale of food or beverages.
Example:
A winery has a courtyard area designed for wedding receptions and contracts to furnish and serve food and beverages for a customer's wedding reception (event) under a lump sum charge. The winery's courtyard has tables and chairs for the wedding reception and the winery provides all tableware, linens, glasses, among others, in addition to the food and beverages. In this case, the winery is functioning as a restaurant and the winery's facility charge for use of the courtyard is taxable, even if the charge is separately stated.
However, if you contract to provide and serve food or beverages at the winery, but also rent a separate area of the winery to your customer for a use other than serving food/beverages, the charge for the use of the separate area unrelated to the serving of food/beverages is not subject to tax if the charge is separately stated on the invoice. A nontaxable facility charge could include a charge for a location for the couple to prepare for the wedding or a charge for a room for the couple to spend their wedding night.
Example:
Same scenario as the above example (for example, winery contracts to provide and serve food or beverage for a customer's wedding reception), except in this case the winery also rents the wedding party a separate area to hold the wedding ceremony. This area is separate from the courtyard and no food or beverages will be served in the area where the wedding ceremony occurs. The winery separately states the charge for the use of this area that is unrelated to the serving of the food or beverages. Because the primary purpose of the area for the wedding ceremony is not to serve food or beverages, the separately stated charge is not subject to tax. Under these circumstances, only the charge for the facilities where food or beverages are served is taxable.
Your charge for the use of the winery for an event where the primary purpose of the winery at the event is to serve food or beverages is taxable even if you only provide either the food or the beverages at the event.
Example:
A winery has a courtyard area designed for wedding receptions and contracts to serve its wine at the wedding reception. However, the customer contracts directly with a caterer, unrelated to the winery, to provide and serve the food at the reception. The winery's facility charge for the use of its courtyard area is taxable because the winery is providing and serving the wine at the event, even though the food is provided and served by an outside caterer. The facility charges are taxable even if the charges are separately stated.
It makes no difference that the facilities are not primarily used for serving food or beverages in the normal course of business, such as a barn, cellar, or garden. When you contract to furnish and serve food or beverages for an event and provide facilities whose primary purpose at the event is to serve food or beverages, the charge for those facilities is taxable, even if separately stated.
Example:
A winery operates a catering service and has a cellar that can be used for private parties. The winery contracts to furnish and serve food or beverages using its catering service for a retirement party in the cellar. In such cases, even though the cellar is generally used for making and storing wine, since the primary purpose of the event is to serve food and beverages, the facility charge for the cellar is taxable.
However, in some instances, you may rent or lease the winery for an event without furnishing and serving food or beverages. Instead, the customer provides the food and beverages, including the wine, for the event. For example, the customer hires a caterer unrelated to you to furnish and serve meals at the event. Under these circumstances, you are not considered to be acting as a restaurant because you are not responsible for furnishing and serving the food or beverages at the event. You are merely leasing the premises and the separately stated charge for the use of the winery is not taxable.
For more information, please see Publication 22, Dining and Beverage Industry, under the section Facility fees charged by retailers other than restaurants or hotels.
Importing Wine
All wine imported into California by a winegrower 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 wine:
- Is still in the possession of the winegrower in internal revenue bond within California.
- Has been exported from California by you (the licensee) or has been sold by you for export and actually exported from California.
- Is otherwise exempt.
Adults who bring wine 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, please visit ABC's website and review their Importing Alcoholic Beverages for Personal or Household Use webpage.
Exporting Wine
Wine sold for export and actually exported outside California is exempt from the sales and use tax and the alcoholic beverage tax.
To qualify as exempt from tax, the wine sold must be:
- Delivered to an armed force of the United States at a depot of the armed force in California for transport outside California, or
- Shipped to a point in a foreign country, where the federal tax on alcoholic beverages is not imposed or is refunded, or
- Shipped to a point outside California by a carrier who is independent of the buyer and the seller, where "carrier" means a person or firm regularly engaged in the business of transporting for compensation property owned by other persons, or
- Shipped to, or delivered to, a point outside California, by any means. The claim for tax exemption must be supported by documentation signed by the purchaser and include a certificate from the appropriate liquor control or tax authority of the state in which the wine has been delivered, showing that the delivery of the wine has been reported to such authority by the purchaser.
Taxpayers must maintain documentation to support that the wine was exported, such as purchase orders, shipping documents, bills of lading, delivery receipts, among others, that show the wine was sold and exported outside California.
Wine sales to customers outside California are generally considered exempt sales in interstate and foreign commerce, and therefore, not subject to sales tax. You must keep documentation, such as a bill of lading, to show that the wine was shipped out of California directly to your customer.
Example: Wine imported for bottling and subsequently exported
An out-of-state winery ships bulk wine to a licensed winegrower/importer (an Importer License is needed to import the wine) in California who will bottle the wine at their bonded facility. The licensed winegrower/importer then exports the bottled wine out of California.
There is no California alcoholic beverage tax due on the bulk wine imported into California for bottling. This is because the bulk wine is being delivered to a licensed winegrower/importer's bonded location. A California winery may receive a bulk shipment of wine in internal revenue bond; however, the winegrower must be licensed with both an importer's license (type 09) and a winegrower's license (type 02) in order to receive the wine in internal revenue bond. See Revenue and Taxation Code section 32174.
There is also no California alcoholic beverage tax due on the bottled wine product that is exported out of California. Wine that has been exported from California by a winegrower is exempt from taxation. The winegrower must keep proof (e.g., bills of lading) of the out-of-state delivery for at least four (4) years after the shipping date. See Revenue and Taxation Code section 32173.
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 California, upon the high seas, are not exports and are subject to the alcoholic beverage tax.
Wine Transactions Exempt from the Alcoholic Beverage Tax
- Wine sold or delivered in internal revenue bond to another winegrower in California (Revenue and Taxation Code section 32174).
- Wine in continuous transit through California in the possession or custody of common carriers (Revenue and Taxation Code section 32051).
- Certain sales of wine for use in trades, professions, or for industrial purposes, and not for beverage purposes (Revenue and Taxation Code section 32052).
- Wine sold in packages of a capacity of larger than one gallon for the following uses (Revenue and Taxation Code section 32053):
- By any state or federal governmental agency, or by any scientific university or college of learning or any laboratory for use exclusively in scientific research, or by any hospital or sanitarium.
- The manufacture of any of the following products, if the products are unfit for beverage use:
- Medicinal, pharmaceutical, or antiseptic products, including prescriptions compounded by registered pharmacists
- Toilet products
- Flavoring extracts
- Sirups (syrups)
- Food products
- Scientific, chemical, or industrial products
- Sales of wine to certain commercial carriers of persons when beverages will be used on their facilities outside California (Revenue and Taxation Code section 32054).
- Wine sold for export and actually exported (Revenue and Taxation Code section 32173).
Recordkeeping
You are required by law to keep business records to properly report and pay the applicable taxes.
Accurate record keeping will help you keep track of your sales and purchases and assist you when preparing your required tax returns and reports. Records must be kept for at least four (4) years, unless otherwise directed by us. 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 to keep:
- Sales invoices
- Cash register tapes
- Sales journals
- Resale certificates
- Shipping documents
- Purchase invoices
- Bank records
- Purchase orders
- Purchase journals
- Tax returns
Every manufacturer, winegrower, wine rectifier, wine importer, and wine wholesaler must keep records of all wine produced, purchased, and sold.
Invoices
Every sale or delivery of wine from one licensee to another licensee must be recorded on a sales invoice, whether or not consideration is involved.
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;
- Must show that delivery was made "in bond" if sold in internal revenue bond by a winegrower to another winegrower;
- Must show all of the following:
- The name and address of the seller;
- The name and address of the purchaser;
- Date of sale or purchase and invoice number;
- The kind, quantity, size, and capacity of packages of alcoholic beverages sold;
- The cost to the purchaser, together with any discount which at any time is to be given on or from the price as shown on the invoice; and
- 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 winegrower, manufacturer, wholesaler, or importer, the following records must be kept:
Retailer | Records Needed |
---|---|
Winegrowers and Manufacturers |
|
Wine Wholesalers |
|
Wine Importers |
|
Inventories
If you are a winegrower, you need to take a physical inventory of all wine and distilling material on hand in United States internal revenue bond on June 30th of each year.
If an annual inventory period ends on a day other than June 30 and has been approved by the Federal Alcohol and Tobacco Tax and Trade Bureau (TTB), then you shall take inventory on that day.
You should keep all records used in preparing inventories for certification at your premises, to be readily accessible for examination by a CDTFA representative.
Losses and Allowances
If you are a licensed business and incurred any of the following described losses, we will refund you an amount equal to the state alcoholic beverage taxes included in the sales price of beverages.
Losses Resulting from Disaster, Vandalism, Malicious Mischief, or Insurrection
A refund may be obtained from us for the alcoholic beverage tax paid after losses resulting from disaster, vandalism, malicious mischief, or insurrection.
To obtain a refund from us for the alcoholic beverage tax paid, 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 California.
- 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 $250 or more.
- A claim for refund is filed with us within six months after the date on which the beverages were lost, rendered unmarketable, or condemned by a duly authorized official.
We will not pay interest on the amount of alcoholic beverage taxes refunded. Losses resulting from theft do not qualify for a refund of the alcoholic beverage tax (see Regulation 2553, Losses Resulting from Disaster, Vandalism, Malicious Mischief, or Insurrection).
Losses resulting from theft do not qualify for a refund of any sales tax because the products were not sold at retail, and therefore, no sales tax was imposed.
Wine Sold for Industrial Uses
Sales of wine by winegrowers for industrial (non-beverage) uses is exempt from the alcoholic beverage tax, but only when sold in packages with a capacity larger than one gallon (Revenue and Taxation Code sections 32052 and 32053).
The use of wine in the manufacture of any of the following products is considered for industrial uses, if the products are unfit for consumption as a beverage (Business and Professions Code section 23112):
- Medicinal, pharmaceutical, or antiseptic products (such as hand sanitizer), including prescriptions compounded by registered pharmacists
- Toilet products
- Flavoring extracts
- Sirups (syrups)
- Food products
- Scientific, chemical, or industrial products
For more information, please visit the Industry Topics tab of our Tax Guide for Alcoholic Beverage.
Spoiled Wine
A registered winegrower or a wine importer is allowed an alcoholic beverage tax exemption on spoiled wine that has not yet been sold in California, or a credit on tax-paid wine that was sold in California and subsequently returned as spoiled, when the spoiled wine is destroyed under our supervision. You must receive written approval from us prior to destroying the wine to claim the exemption or credit.
Unsupervised Destruction – Wine Importers
Wine importers can claim a credit for unsupervised destruction of wine when the quantity being destroyed as spoilage is 2,500 gallons or fewer of still wine (or 1,500 gallons or fewer of champagne or sparkling wine by volume). However, you must receive written approval from us prior to destroying the wine to claim the exemption or credit (Regulation 2552).
Supervised Destruction
If you do not qualify for unsupervised destruction as noted above, you may still be eligible to claim an exemption or credit on tax-paid wine that is destroyed with supervision (Revenue and Taxation Code section 32176). We will contact you regarding the appropriate type of supervision required, including witnessing the destruction virtually through the use of video conferencing, to claim your exemption or credit after you complete and submit CDTFA-775.
Submitting a Wine Destruction Approval Request
To submit a destruction request, a winegrower or importer must submit CDTFA-775, Application for Approval and Declaration of Destruction for Spoiled Beer or Wine. The steps below outline the process for a destruction request:
- Complete CDTFA-775 Sections I and II and email it to CDTFA775@cdtfa.ca.gov. On the subject line of the email, include the following: Destruction Approval Request – CDTFA Account (input account number).
- We will review your request and determine whether your wine qualifies for an unsupervised destruction or if supervision by a CDTFA representative is required. We will contact you if additional information is needed prior to approval.
- If your request is:
- Approved – We will complete Sections III and IV (if applicable). The approval process generally takes up to three business days; however, if an appointment with a CDTFA representative is needed the process can take up to 12 business days. Once approved, the form will be available on your online services profile at the account level under the unread messages.
- Not approved – We will contact you and the CDTFA-775 will not be returned to you.
- Please complete Section V after all beverages listed in Section I have been destroyed. This form must be signed by the authorized person in the business organization who witnessed the disposal or destruction of the spoiled alcoholic beverages.
- When filing your return online, you are required to upload the completed CDTFA-775 for each filing period you are claiming this exemption or credit. You may be required to upload additional supporting documentation (for example, destruction facility invoices, Notice of Intent submitted to TTB, bills of lading, among others), and you will be notified if this is the case. You should retain the original documents for your records.
Please note: All exemptions or credits claimed are subject to verification and may be disallowed for improper destruction and/or insufficient documentation.
For more information, please visit the Industry Topics tab of our Tax Guide for Alcoholic Beverage.
Powdered Alcohol
On and after January 1, 2017, it is illegal to possess, purchase, sell, offer to sell, distribute, manufacture, or use powdered alcohol.
ABC 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 $500.
Need to know more? Follow the links below for more information about the topics covered in this guide, as well as other information you might find helpful:
Tax Guides
- Tax Guide for the Agricultural Industry
- Tax Guide for the Manufacturing and Research & Development Exemption
- Tax Guide for Alcoholic Beverage
Laws and Regulations
- Alcoholic Beverage Tax Law
- 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
- Alcoholic Beverage Tax Regulations
- Regulation 1525, Property Used in Manufacturing
- Regulation 1525.4, Manufacturing and Research & Development Equipment
- Regulation 1533.1, Farm Equipment and Machinery
- Regulation 1533.2, Diesel Used in Farming Activities or Food Processing
- Regulation 1589, Containers and Label
- Regulation 1602, Food Products
- Regulation 1603, Taxable Sales of Food Products
NAICS – North American Industry Classification System
The Census Bureau is the official US Government Authority who manages the NAICS Coding System. Go to their 2012 NAICS search tool to determine your NAICS code.
Returns, Reports, and Forms
- BOE-217, Common Carrier's Report of Delivery,
- BOE-269-A, Beer and Wine Imported into California Report
- CDTFA-501-BW, Beer and Wine Importer Tax Return
- CDTFA-501-WG, Winegrower Tax Return
- BOE-1096, Customs Broker's Report of Transactions
Partial Exemption Certificates
- CDTFA 230-G, Partial Exemption Certificate for Qualified Sales and Purchases of Diesel and Farm Equipment and Machinery
- CDTFA-230-M, Partial Exemption Certificate for Manufacturing, Research and Development Equipment
- CDTFA-230-MC, Construction Contracts – Partial Exemption Certificate for Manufacturing, Research and Development Equipment
- CDTFA-230-N, Exemption Certificate for Qualified Sales and Purchases of Liquefied Petroleum Gas
- CDTFA 608, Certificate of Farming Use
Publications
- Publication 22, Dining and Beverage Industry
- Publication 66, Agricultural Industry
- Publication 92, Alcoholic Beverage Tax
- Publication 103, Sales for Resale
- Publication 541, Manufacturing and Research & Development Exemption
Tax Rates
Other Helpful Resources
- CDTFA Online Services – Learn about the online services CDTFA offers.
- Verify a Permit or License – 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.
- Get It In Writing! – The Sales and Use Tax Law 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 Field Offices – A comprehensive listing of all CDTFA field offices and contact information.
- Taxpayers' Rights Advocate (TRA) – The TRA Office helps taxpayers when they are unable to resolve a matter through normal channels when they want information regarding procedures relating to a particular set of circumstances, or when there are apparent rights violations.
- Internal Revenue Service (IRS) Guide for Wine Industry – An IRS guide that provides insight unique to the wine industry.
- Department of Alcoholic Beverage Control – Provides helpful information for businesses requiring ABC licenses.
- Alcohol and Tobacco Tax and Trade Bureau (TTB) – Provides information and documents for wine producers, importers, exporters, and wholesalers regarding alcohol permitting, labeling, and marketing requirements.
- Local and District Tax Guide for Retailers – A tax guide for retailers to learn more about how to properly collect, report, and pay local and district taxes.