BILL NUMBER:S7019

TITLE OF BILL:

An act
to amend the tax law, in relation to farm
winery and farm distillery sales tax
information return filing requirements

PURPOSE OF THE BILL:

The bill would exclude licensed farm wineries and farm distilleries
from the sales tax information return filing requirements imposed by
Tax Law § 1136 (i).

SUMMARY OF PROVISIONS:

Section 1 of the bill would amend Tax Law § 1136 (i) to exclude
persons operating pursuant to a farm winery license or a farm
distillery license issued by the State Liquor Authority ("SLA"), or
pursuant to both such licenses, from the obligation to file the
annual information return required by that subdivision.

Section 2 of the bill provides for an immediate effective date and
applies the law to annual returns due on and after March 20, 2012.

              

EXISTING LAW:

Tax Law § 1136(i) requires "wholesalers," as defined in Alcoholic
Beverage Control Law ("ABCL") § 3, that have made certain sales of an
alcoholic beverage without collecting sales and use tax, to file
annual information returns with the Department of Taxation and
Finance ("DTF") that include the identity of any customers that
qualify as sales tax vendors, and the volume of sales made to them.
Both farm distilleries and farm wineries are covered by this
requirement if they make sales to persons who may, in turn, make
retail sales as permitted pursuant to retail licenses. See ABCL
61(2-c), 76-a(3).

PRIOR LEGISLATIVE HISTORY:

This is a new bill.

STATEMENT IN SUPPORT:

The third-party sales tax reporting provisions require wholesalers to
report all sales made to restaurants, bars and other retailers. DTF
uses this information to verify sales as reported by those retailers.
While farm wineries and farm distilleries that sell to retailers
technically qualify as wholesalers, the burden imposed on them by the
filing requirement outweighs any benefits received by the DTF. Farm

wineries and farm distilleries are by definition, small. A farm
winery license limits the holder to producing no more than 150,000
gallons annually. A farm distillery license limits the holder to
producing no more than 35,000 gallons annually.

Because of their restricted size, it is difficult for farm wineries
and farm distilleries to absorb the cost of complying with the annual
filing requirement. Exempting them will not undermine the
effectiveness of the third-party reporting legislation, because
purchases from farm wineries and farm distilleries account for a very
small percentage of retailers' overall purchases.
Moreover, farm wineries and farm distilleries are required to maintain
sales records pursuant to requirements imposed by the SLA, which DTF
may obtain upon request.

BUDGET IMPLICATIONS:

None

EFFECTIVE DATE:

The amendments would take effect immediately and would apply to annual
returns due on and after March 20, 2012.