Quick Reference Guide to Wine Excise Tax

This guide is intended to be a brief overview of the basic requirements for the proper computation and filing of wine excise tax.

The complete text of all wine tax regulations may be found at 27 CFR 24.270-.279, available free at http://www.ttb.gov. The tax law is 26 U.S.C. 5041-5043, and it may be found at http://www.access.gpo.gov.

If you have questions about this guide, please contact the National Revenue Center by mail at 550 Main St. Suite 8002, Cincinnati, OH 45202. Telephone toll-free 1-877-TTB-FAQS (877-882-3277).

General Excise Tax Information

1. What is the tax on wine?

   26 U.S.C. 5041(b)

   If ½ of 1% to not over 14% alcohol	$1.07 per gallon
   If more than 14% and not over 21% alcohol	$1.57 per gallon
   If more than 21% and not over 24% alcohol	$3.15 per gallon
   Artificially Carbonated	$3.30 per gallon
   Sparkling	$3.40 per gallon
   Hard Cider	$.226 per gallon

   See below for information about Credit for Small Domestic Producers on wines other than sparkling wine.

2. Who pays the tax?

27 CFR 24.270

The proprietor of the bonded wine premises who removes the wine from bond for domestic consumption or sale.

3. When is the tax due?

27 CFR 24.271(b)

14 days after the close of the tax period, unless filed yearly. If the 14^th day falls on a Saturday, Sunday or legal holiday, the tax must be filed on the day immediately preceding which is not a Saturday, Sunday or a legal holiday. Special rules apply to September returns.

4. What are the tax return periods?

27 CFR 24.271(b)(c)

Generally, they are from the 1^st-15^th day of the month and the 16^th-last day of the month.

September has three tax periods: for taxpayers who are not required to file their taxes electronically, they are from the 1^st-15^th, the 16^th-25^th and the 26^th-30^th. For those who do file electronically (discussed below), they are from the 1^st-15^th, the 16^th-26^th, and the 27^th-30^th.

Some wineries are eligible to file their taxes annually.

5. Who may file annually?

27 CFR 24.273

If the total excise taxes the previous calendar year were less than $1000, or if you are a new proprietor who expects the first year's taxes to be less than $1000, AND you expect your taxes to be less than $1000 the current year, you may file one excise tax return for the calendar year.

The deferral portion of your operating bond must be sufficient, and you may not have additional deferral coverage on file.

It is due 30 days after the close of the calendar year. The rule about Saturday, Sunday, legal holidays stated above applies.

6. What if no taxes are due?

27 CFR 24.271(a)

Do not send ATF a return if no taxes are due. Many wineries do not make taxable removals every return period. Only send a return if remittance is due.

7. How is the tax paid?

27 CFR 24.271(a)

The tax is submitted on ATF Form 5000.24 with a check or money order. The address is shown on the back of the return.

8. Who must pay by Electronic Fund Transfer (EFT)?

27 CFR 24.272

Any proprietor who is liable for a gross amount of tax of $5 million or more annually is required to file taxes electronically. Instructions are available from the National Revenue Center.

All members of a Controlled Group are considered one taxpayer when determining if $5 million in taxes have been paid. Accordingly, all members of a controlled group required to EFT must submit their taxes by this method, regardless of the amount of taxes due by individual members of the group.

9. What if the tax is filed late?

26 U.S.C. 6651, 6656

27 CFR 24.274

The law imposes penalties for failure to file a return, failure to pay tax, and interest. Additional penalties apply for failure to timely EFT.

10. What date is used to determine if a return was filed on time?

27 CFR 24.277

The official U.S. Postal Service postmark date on the envelope, or the date of registry or date of sender's receipt, if sent by registered or certified mail.

Credit for Small Domestic Producers

11. What is the credit for?

26 U.S.C. 5041(c)

In 1991, the excise tax on wine was increased by $.90 per gallon, with the exception of sparkling wine. At the same time, the law provided that small domestic producers of wine may qualify for a credit of up to $.90 per gallon on part of their annual taxable removals, other than sparkling, to keep the wine taxes for small wineries the same or nearly the same as they were before the increase.

12. Who qualifies for the credit?

27 CFR 24.278(a)

A person who produces not more than 250,000 gallons of wine annually at a qualified bonded wine premises in the United States.

13. How much is the credit?

27 CFR 24.278(d)(1)(2)

Up to $.90 per gallon on the first 100,000 gallons of wine (other than sparkling) taxably removed per calendar year. Removals beyond 100,000 gallons are taxed at the tax rates shown in the law at 26 U.S.C. 5041.

14. How much credit may be taken?

27 CFR 24.278(d)(1)(2)

The amount of credit is based on how much wine is produced by the winery each calendar year.

If production is 150,000 gallons or less, the credit is $.90 on the first 100,000 gallons (other than sparkling) taxably removed each year.

If production is more than 150,000 and not more than 250,000, the credit is reduced by 1% for every 1,000 gallons produced in excess of 150,000 (i.e., the more wine made, the smaller the credit). Contact the National Revenue Center for assistance in determining the correct rate of credit.

Wineries which are qualified to produce wine, but for some reason do not, are not entitled to take credit during the year when there is no production.

Production of all members of a controlled group are added together to determine the correct rate of credit (if any) that may be taken by all members of the group.

15. What is meant by "produced?"

27 CFR 24.278(e)(1)

For these purposes, the amount of wine "produced" is the wine produced by fermentation plus volume increases due to amelioration, wine spirits addition, sweetening, production of a formula wine, of sparkling wine, and wine produced by the same company outside the United States.

16. How much wine must be produced every year to qualify for credit?

26 U.S.C. 5041(c)

The law does not give a minimum amount which must be produced annually.

17. At what point in winemaking is wine considered "produced?"

27 CFR 24.176(b)

The regulation titled "Determination of Wine Produced," 27 CFR 24.176(b) states: "Upon completion of fermentation or removal from the fermenter, the volume of wine will be accurately determined, recorded and reported on ATF Form 5120.17, Report of Bonded Wine Premises Operations, as wine produced."

It is the winemaker's decision to determine when fermentation has been completed and the product is placed in storage. At that time, the volume is declared "produced."

18. May credit be taken on wine purchased from another winery?

Credit may be taken on wine the small producer did not produce so long as:

The small producer produces some wine;

There is no benefit to any winery which would not otherwise be entitled to credit.

It may be blended with the small winery's own production, or removed as a separate product.

19. Is the credit listed on the return?

27 CFR 24.278(f)

Yes. All credit must be shown in Schedule B of the tax return Form 5000.24 as an adjustment decreasing tax due.

You must state the amount of wine and rate of credit. The total tax paid is the sum of wine removals with credit and tax on sparkling wine or other wines, if any, which is not entitled to credit.

Return to Index

20. May another bonded premises pay the tax for my wine with credit?

27 CFR 24.278(b)(2)

A winery may ship wine in bond to another bonded premises for storage and later taxpayment. The credit the small winery is entitled to may be transferred to the bonded storage premises (the transferee) for use by the transferee on behalf of the owner-small winery when the tax is paid to ATF. The transferee is often, but not always, a Bonded Wine Cellar (BWC). It may be another winery.

When the small winery wishes the transferee to taxably remove its wine with credit, it provides the transferee with written information about its rate of credit and that the removal is among the owner's first 100,000 gallons of wine taxably removed for that year.

The taxpayer lists the name of the winery for whom it is paying excise tax, the amount of wine, and the amount of credit on the return when the tax is paid with the owner's credit.

NOTE: credit may be transferred only on wine that was entirely of the small winery's production. If wine was blended in that was purchased from another producer, the percentage that was not produced by the small winery must be tax paid at the full tax rates by the transferee.