Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2020
Alcoholic Beverage Tax Law
ANALYSIS OF ALCOHOLIC BEVERAGE TAX LAW
Nature and Rate of Tax. The administration of this tax is closely related to the licensing of persons dealing in alcoholic beverages in this state. The tax is imposed on the "sale" of the alcoholic beverages by manufacturers, distillers, winegrowers, wholesalers, rectifiers, importers, and others selling such beverages with respect to which no tax has been paid. Tax applies to sales to unlicensed persons within areas over which the United States Government exercises jurisdiction. The rates are:
Beer: $1.24 per barrel of 31 gallons and at a proportionate rate for any other quantity (Sec. 32151) and an additional 16 cent per gallon surtax. (Sec. 32220.)
Wine: Still wines containing not more than 14 percent of absolute alcohol by volume, 1 cent per wine gallon and 19 cent per wine gallon surtax; wines containing more than 14 percent, 2 cents per wine gallon and 18 cent per wine gallon surtax; champagne and sparkling wines, 30 cents per wine gallon; sparkling hard cider, 2 cents per wine gallon and 18 cent per wine gallon surtax; and at a proportionate rate for any quantity. (Sec. 32151 and 32220.)
Distilled spirits: Distilled spirits of proof strength (100 proof) or less, $2 per wine gallon, and at a proportionate rate for any quantity, and on all nonliquid distilled spirits containing 50 percent or less alcohol by weight 2 cents per ounce avoirdupois, and at a proportionate rate for any quantity and a $1.30 per gallon surtax. Distilled spirits in excess of proof strength, and all nonliquid distilled spirits containing more than 50 percent alcohol by weight, are taxed at double the above rate in addition to a $2.60 per gallon surtax. (Sec. 32201, Sec. 32220.)
"Sale." "Sale" includes the transfer with or without consideration of title to alcoholic beverages; the delivery of alcoholic beverages pursuant to an order placed for the purchase of such beverages; the transfer of such beverages by a person holding one type of license to himself for the purpose of sale under a retailer's license; and the transfer of such beverages by a customs broker to any person within this state except a licensed importer. "Sale" does not include the return of alcoholic beverages by a licensee to the licensee from which the beverages were purchased. (Sec. 32003, Business and Professions Code Section 23025.)
General Exemptions: Tax does not apply to
1. Alcoholic beverages in continuous transit through the state. (Sec. 32051.)
2. Certain sales of alcohol, distilled spirits, or wine for use in the trades, professions, or industries, and not for beverage purposes. (Sec. 32052.)
3. Sales of alcoholic beverages to certain common carriers of persons when the beverages will be used on their facilities outside this state. (Sec. 32054.)
Presumptions and Exemptions:
1. Beer: It is presumed that all beer removed from internal revenue bonded premises of a beer manufacturer has been sold in this state unless it is established:
a. The beer was sold and delivered in internal revenue bond to another beer manufacturer in this state. (Sec. 32171.)
b. Was exported. (Sec. 32171.)
c. Was otherwise exempted from tax, such as consumed by employees on the premises (Sec. 32172)
2. Wine: It is presumed that all wine removed from a winery or wine cellar bonded under internal revenue laws has been sold in this state unless it is established:
a. That the wine was exported. (Sec. 32173.)
b. That the wine was sold or delivered in internal revenue bond to another winegrower. (Section 32174.)
c. That the wine was otherwise exempt.
3. Imported beer and wine are presumed sold at the time received by the licensee in this state, unless it is established that the beer or wine was exported. (Sec. 32175.)
4. Credit may be allowed certain licensees for taxpaid wine or beer that was subsequently exported or destroyed. (Sec. 32176.)
5. Distilled Spirits: It is presumed that all distilled spirits acquired by any taxpayer in this state have been sold by him unless it is established:
a. The distilled spirits are still in his possession.
b. They were sold or delivered to another licensed distilled spirits manufacturer, rectifier, or wholesaler.
c. They have been exported.
d. They were lost through unintentional destruction.
e. They were sold to certain listed instrumentalities of the armed forces of the United States. (Sec. 32177.5).
They are otherwise exempt from tax. Examples of sales not subject to tax include sales of bulk brandy to a licensee of another state, sales of distilled spirits to certain common carriers for sale or use aboard their facilities. (Secs. 32211 to 32213.)
Credit for tax paid may be claimed for distilled spirits sold to certain persons holding a permit under federal law and who use the distilled spirits in food products. (Sec. 32214.)
Registration and Bond. The issuance by the Department of Alcoholic Beverage Control of any manufacturer's, winegrower's, wine blender's, distilled spirits manufacturer's agents, rectifier's, wholesaler's, importer's, customs broker's license, or wine direct shipper permit constitutes registration under this law. Each registrant shall post such security as is required by law. (Secs. 32101–32107.)
Common carriers, except railroads and steamship companies must register with the Board before transporting alcoholic beverages into this state. (Sec. 32109.)
Returns and Payments. Common carriers selling distilled spirits on their facilities in this state, shall file a return with the Board for each calendar month, on or before the first day of the second calendar month following the month for which the return is made. (Sec. 32202.) All other taxpayers must file a return on or before the 15th day of the month following the month for which the return is made. Each return must be accompanied by a remittance of the tax due. (Sec. 32251.)
Whenever the returns filed by a taxpayer report tax liabilities that average less than $100 per month, the Board may require returns and payment for quarterly or annual periods. (Sec. 32251.5.)
Unless an extension of time is granted, a 10 percent penalty will accrue if the tax is not paid when due and a penalty of $50 will be imposed if a return is not filed within the time prescribed. The penalties imposed are limited to either 10 percent of the tax or $50, whichever is greater. (Sec. 32252.) Interest accrues from the due date of the tax until paid. (Secs. 32251–32255.)
Records. The taxpayers must keep adequate and complete records on forms prescribed by the Board.
Disposition of Proceeds. Taxes, interest, and penalties are deposited in the State Treasury to the credit of the Alcohol Beverage Control Fund. (Sec. 32501.)
Penalties. Severe civil and criminal penalties are imposed for violation of the law. (Secs. 32551–32555.)
Refunds on Losses. On and after April 1, 1980, a refund without interest is allowed for tax paid on alcoholic beverages which have been lost, rendered unmarketable, or condemned by authorized officials due to certain disasters or damages. The minimum claim allowable is $250.