Tax Guide for Alcoholic Beverage

Helping your business succeed is important to the California Department of Tax and Fee Administration (CDTFA). The taxes you collect and pay to the state help fund state and local services and programs that are important to you and your community.

Understanding the tax issues and registration requirements specific to the alcoholic beverage industry can be time-consuming and complicated, so it is important that you get the information you need in a timely and understandable way, helping you focus on starting and growing your business.

This guide is provided to help you better understand the tax obligations for sellers, manufacturers, and importers of alcoholic beverages.

How the Revenue is Used

Revenues from the tax are deposited into the Alcohol Beverage Control Fund and are withdrawn for use by the state's General Fund or used to pay refunds under this program.

How to Use This Guide

Each section of this guide contains important information relevant to your alcoholic beverage business.

The Getting Started tab provides key resources related to registration, filing returns, account maintenance, and other important information you need.

The Industry Topics tab contains specific topics important to the alcoholic beverage industry.

The Resources tab provides links to useful information, including special notices, other relevant industry guides, publications, and statutory and regulatory information.

If You Need Help

See the How to Contact Us page for contact information.

If you have suggestions for improving this guide, please contact us via email.

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The alcoholic beverage tax is a per-gallon excise tax collected on the sale, distribution, or importation of alcoholic beverages in California. The CDTFA collects the tax and administers the program in cooperation with the Board of Equalization.

In general, you must register with the CDTFA if you are required to obtain one or more of the following licenses issued by the California Department of Alcoholic Beverage Control (ABC). After you apply with the ABC, we will notify you of which CDTFA Alcoholic Beverage Tax Account type you are required to register for.

  • Beer Vendor (Certificate of Compliance Holder)
  • Craft Distiller
  • Customs Broker
  • Distilled Spirits Manufacturer's Agent
  • Importer (Beer and Wine; Beer and Wine Importer's General, Brandy, and Distilled Spirits)
  • Industrial Alcohol Dealer
  • Manufacturer (Beer, Small Beer, Brandy, and Distilled Spirits)
  • On-Sale General for Airplanes
  • On-Sale General for Boats
  • On-Sale General for Trains
  • Public Warehouse
  • Rectifier (Distilled Spirits, Wine)
  • Wholesaler (Distilled Spirits, Brandy)
  • Wine Blender
  • Wine Direct Shipper
  • Winegrower

Notes

  1. Effective November 9, 2020, new public warehouse license holders (Type 14) must register with us for a public warehouse account.

In addition, all common carriers, except railroads and steamship companies, must also register with us in order to transport alcoholic beverages into California.

You must also register for a seller's permit and file sales and use tax returns with us. For more sales and use tax information, review the industry guides below that relate to the alcoholic beverage product you sell.

To register for your alcoholic beverage account, a seller's permit, any other permit, license (cigarette, tobacco, or fuel), or account with the CDTFA, visit our online registration page.

If you have questions, please contact our Customer Service Center at 1-800-400-7115 (CRS:711), Monday through Friday, 8:00 a.m. to 5:00p.m., (Pacific time), except state holidays.

Go to www.cdtfa.ca.gov, login with your username and password to update your account information including, but not limited to, selling your business, changing your mailing address, email address, or telephone number, or closing your business. If you prefer, you may use form CDTFA-345-SP, Notice of Business Change, Special Taxes and Fees Accounts, to notify CDTFA of changes. It is important to notify us so we can update our records to ensure you receive information, email reminders to electronically file, and other updates timely.

You may also contact CDTFA Customer Service Center at 1-800-400-7115 (TTY: 711) and select the option for Special Taxes and Fees or send a message through our website at Email Your Tax Questions.

Visit the tax rate page to view current and historical alcoholic beverage tax rates.

File a Return Online – CDTFA's online filing service is easy, fast, and free!

The CDTFA encourages all businesses to file online. All alcoholic beverage tax returns, reports, and supplemental reports are eligible to file online. The CDTFA has developed Microsoft Excel file templates to help you file your alcoholic beverage report or return and its supplemental report(s) in our online services system. To obtain these Excel template files, see our Alcoholic Beverage Online Filing webpage for a complete listing, download the files you need, and complete them. You will be able to attach (upload) the completed Excel file when you file your report or return online.

Every licensed beer manufacturer is required to file a tax return and supplemental report (if applicable) on or before the 15th of the month following the period covered by the return. A return must be filed even if no transactions were made during the reporting period. Excel template files for filing online may be found on our Alcoholic Beverage Online Filing webpage.

Every licensed beer and wine importer is required to file a tax return and supplemental report (if applicable) on or before the 15th of the month following the period covered by the return. A return must be filed even if no transactions were made during the reporting period. Excel template files for filing online may be found on our Alcoholic Beverage Online Filing webpage.

Every licensed winegrower or wine blender is required to file a tax return and supplemental report (if applicable) on or before the 15th of the month following the period covered by the return. A return must be filed even if no transactions were made during the reporting period. Excel template files for filing online may be found on our Alcoholic Beverage Online Filing webpage.

Every distilled spirits manufacturer/importer is required to file a tax return and supplemental report(s) (if applicable) on or before the 15th of the month following the period covered by the return. A return must be filed even if no transactions were made during the reporting period. Excel template files for filing online may be found on our Alcoholic Beverage Online Filing.

Each common carrier is required to file a tax return on or before the first day of the second month following the monthly period. A return must be filed even if no tax is due for the reporting period.

Common carriers transporting alcoholic beverages into the state must file a report on or before the 15th of each month covering deliveries made during the preceding calendar month. A report must be filed even if there are no deliveries to report. Excel template files for filing online may be found on our Alcoholic Beverage Online Filing webpage.

Each holder of a California Certificate of Compliance issued pursuant to section 23671 of the California Beverage Control Act and section 32452 of the Revenue and Ta xation Code is required to file a report on or before the 10th day of each month, and must show all shipments of beer into California during the preceding calendar month. A report must be filed even if there are no shipments to report. Excel template files for online filing may be found on our Alcoholic Beverage Online Filing webpage.

Each customs broker of alcoholic beverages is required to file a report on or before the 15th day of each month, and must show all transactions of alcoholic beverages into California during the preceding calendar month. A report must be filed even if there are no transactions to report. Excel template files for online filing may be found on our Alcoholic Beverage Online Filing webpage.

“Public warehouse” means any place licensed for the storage of, but not the sale of, alcohol or alcoholic beverages for the account of other licensees and includes United States custom bonded warehouses and United States internal revenue bonded warehouses when the bonded warehouses are used for storage of alcoholic beverages for the account of another licensee. (Business and Professions Code section 23036)

Every licensed public warehouse (Type 14) is required to complete and file a Public Warehouse Distilled Spirits Inventory Report on or before January 15 and July 15 of each year. The reporting must include all distilled spirits held in storage, in bottled form, at the close of business on December 31 and June 30. A report must be filed even if there is no activity to report.

When filing online, you are able to file and pay your alcoholic beverage tax due in one transaction. You may also visit our website to conveniently make a payment or learn about our various payment options.

Taxpayers with an estimated average monthly tax liability of $20,000 or more are required to pay amounts due by electronic funds transfer (EFT). The CDTFA will notify you in writing if you are required to pay your taxes electronically.

Payments must be submitted by the due date to be considered timely. For an EFT payment to be timely, it must be initiated on or before the filing due date and funds must settle into the CDTFA's bank account on or before the banking day following the due date.

The penalty for filing a late tax return (including tax returns for which no tax was due) and/or late payment of tax is $50 or ten percent of the amount of tax due, whichever is greater. Late filers must include payment for the penalty and interest with their tax return.

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Beer

"Beer" means any alcoholic beverage obtained 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 ale, porter, brown, stout, lager beer, small beer, and strong beer, but does not include sake, known as Japanese rice wine. Beer may be produced using the following materials as adjuncts in fermentation: honey, fruit, fruit juice, fruit concentrate, herbs, spices, and other food materials. Beer aged in an empty wooden barrel previously used to contain wine or distilled spirits shall be defined exclusively as "beer" and shall not be considered a dilution or mixture of any other alcoholic beverage. (Business and Professions Code section 23006)

Wine

"Wine" means the product obtained from normal alcoholic fermentation from sound ripe grape juice or other agricultural products containing natural or added sugar or any such alcoholic beverage which is added grape brandy, fruit brandy, or spirits of wine, which is distilled from the particular agricultural product or products the wine is made from and other rectified wine products and by whatever name and which does not contain more than 15 percent added flavoring, coloring, and blending material and alcohol by volume no more than 24 percent, and includes vermouth and sake, known as Japanese rice wine. (Business and Professions Code section 23007)

Distilled Spirits

"Distilled spirits" means an alcoholic beverage obtained by the distillation of fermented agricultural products, and includes alcohol for beverage use, spirits of wine, whiskey, rum, brandy, and gin, including all dilutions and mixtures thereof. "Distilled spirits" does not include "powdered alcohol," as defined in Business and Professions Code section 23003.1. (Business and Professions Code section 23005)

Beer and wine

The excise tax on beer and wine is generally paid by manufacturers, wine growers, and importers. Sellers of beer and wine must pay the excise tax if the tax was not paid by the manufacturers, winegrowers, or importers. Beer and wine is presumed to be sold, and the alcoholic beverage tax is due when it leaves a manufacture's facility or is removed from internal revenue bonded premise, unless:

  • It was sold and delivered in internal revenue bond to another beer manufacturer or wine grower in California.
  • It was exported or sold for export and actually exported from California.
  • The sale is otherwise exempt.

Distilled spirits

In general, the excise tax on distilled spirits is paid by distilled spirits wholesalers based on sales to in-state retailers. Sellers of distilled spirits must pay the excise tax if the tax was not paid by the wholesaler.

Tax credits may be allowed for:

  • Beer or wine subsequently exported outside California or destroyed (maintain documentation to support the exemption/credit); and
  • Distilled spirits sold to certain persons holding a permit under federal law and who use the distilled spirits in food products.

The following are exempt from the alcoholic beverage tax:

  • Alcoholic beverages traveling through California destined for outside the state.
  • Certain sales of alcohol, distilled spirits, or wine for use in trades, professions, or for industrial purposes, and not for beverage purposes (Business and Professions Code §23111, §23112, and §23113). See section below for more information regarding alcohol beverages sold for industrial purposes.
  • Distilled spirits, beer, and wine sold for export and actually exported.
  • Sales of alcoholic beverages to certain commercial carriers of persons when beverages will be used on their facilities outside California.
  • Sales of distilled spirits by brandy manufacturers, distilled spirits manufacturers, rectifiers, importers, and distilled spirits wholesalers to U.S. Army, Air Force, Navy, Marine Corps, or Coast Guard exchanges, officers' clubs, noncommissioned officers' and enlisted men's clubs, or messes located in California.

There is an alcoholic beverage tax exemption on the sale of alcohol, distilled spirits, or wine by distilled spirits manufacturers, brandy manufacturers, rectifiers, industrial alcohol dealers, or winegrowers for industrial uses, but only when sold in packages with a capacity larger than one gallon (Revenue and Taxation Code §32052 and §32053).

Alcohol, distilled spirits, or wine used in the manufacture of any of the following is considered an industrial use, if the products are unfit for consumption as a beverage (Business and Professions Code §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
Exempt sale of alcohol, distilled spirits, or wine for industrial uses can be claimed on:
Alcoholic Beverage Tax Form Associated line
Online Filing Paper Return
CDTFA-501-DS, Distilled Spirits Return Line: Other exemptions Line 19: Other exemptions
CDTFA-501-WG, Winegrower Return Line: Federal tax-paid wine sold for industrial use Line 7: Federal tax-paid wine sold for industrial use
CDTFA-501-BW, Beer & Wine Importer Return Line: Other exemptions Line 4: Other exemptions

As a beer and wine importer, beer manufacturer, or winegrower, you are allowed an alcoholic beverage tax exemption or credit for spoiled beer or wine destroyed under the supervision of a CDTFA representative, as follows (Revenue and Taxation Code §32176):

  • An exemption on spoiled beer or wine that has not yet been sold in California
  • A credit on beer or wine that was sold in California, subsequently spoiled, and then returned to you by the wholesalers.
The exemption or credit on spoiled beer or wine can be claimed on:
Alcoholic Beverage Tax Form Associated line
Online Filing Paper Return
CDTFA-501-BM, Beer Manufacturer Return Line: Federal tax-paid beer destroyed as stated in RT&C 32176 (b) Line 13: Federal tax-paid beer destroyed
CDTFA-501-WG, Winegrower Return Line: Other exemptions Line 8: Other exemptions
CDTFA-501-BW, Beer & Wine Importer Return Line: Spoiled beer
or
Line: Spoiled wine
Line 3: Spoiled beer or wine

Small Quantity Destruction for Beer and Wine Importers

Beer and wine importers are allowed the exemption or credit for destruction of small quantities of beer or wine without the supervision of a CDTFA representative. The exemption or credit is allowed only after prior written approval is secured from the CDTFA (Regulation 2552).

For the purposes of beer or wine destruction, “small quantities” means the following:

  • The quantity of beer destroyed is 2,500 gallons or less, or
  • The quantity of still wine destroyed is 2,500 gallons or less, or
  • The quantity of champagne or sparkling wine destroyed is 1,500 gallons or less.

To secure a prior written approval, a beer and wine importer may submit a CDTFA-775, Approval and Declaration of Destruction for Spoiled Beer or Wine . Please follow the steps below to complete your claim.

  1. Complete only Sections I and II of the CDTFA-775 form and email it to CDTFA775@cdtfa.ca.gov.
  2. If your request is approved, a CDTFA representative will complete Section III approving the destruction of the spoiled beverages indicated in Section II. The approval process can take up to three business days. The approved form can be obtained by viewing your unread messages under the Alerts section of your online services profile.
  3. After all beverages indicated in Section II have been destroyed, Section IV of the CDTFA-775 form must be signed by the person who witnessed the destruction of the beverages.
  4. The exemption or credit can be claimed on the return line for spoiled beer or wine. Upload the completed CDTFA-775 form for the filing period in which the exemption or credit is claimed. You should retain the original document for your records.

You must maintain your records at your licensed premises unless we have given you permission to keep them at another location. For additional information regarding record retention, please view Regulation 4901.

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:

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  • Contact Us – A listing of California Department of Tax and Fee Administration (CDTFA) contacts for your questions and concerns.
  • 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.
  • Special Notices – CDTFA special notices are issued whenever there is a change in law, tax rates, or CDTFA procedures.
  • CDTFA Online Services – Learn about the online services CDTFA offers.
  • CDTFA Field Offices – A comprehensive listing of all CDTFA offices and contact information.
  • Get It In Writing! – Tax and Fee Laws can be complex, and you are encouraged to put your tax questions in writing. You may also send your request in a letter to: Program Administration Branch, MIC; 31, California Department of Tax and Fee Administration, P.O. Box 942879, Sacramento, CA 94279-0031.
  • 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, or when there are apparent rights violations.