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October 2016 WINES&VINES 19 WINE INDUSTRY NEWS S an Rafael, Calif.—The Cali- f o r n i a S t a t e B o a r d o f Equalization (BOE) pub- lished an online sales tax guide for winemakers to help clear up some of the confusion about which winemaking products are exempt from sales tax and how to get a refund from suppliers for any re- cent purchases. The guide, available at boe. ca.gov, follows news that the BOE, which administers and sets Califor- nia's taxes, changed the classifica- tion of yeast earlier this year. Yeast used for winemaking had been subject to sales tax for decades until industry suppliers launched a campaign to get the BOE to change the tax code. Aside from the elemental role yeast plays in making wine, members of the wine industry pointed out the inconsis- tency that yeast used for making beer was exempt from sales tax. In late January, an attorney with BOE concluded that the agency should treat yeast used for making wine the same as that used for beer. The decision also meant that suppliers would need to retroactively refund the money they'd collected for sales tax from their winery clients. While it was welcome news at the time, suppliers wanted more clarity about products such as ma- lolactic fermentation bacteria, nutrients and other additions be- fore they initiated the laborious process of tallying up refunds for their clients. "For a long time, it didn't make sense that yeast used in the pro- duction of wine was set to a differ- ent standard for the production of beer," said BOE board chairwoman Fiona Ma, who represents BOE Board District Two, which includes all of the counties of California's North Coast AVA as well as the Central Coast AVA. "Both served similar purposes for fermentation of the product, and it was strange that tax was applied differently." The guide has a full explana- tion for how to submit a claim for a refund on taxes paid for prod- ucts that are now considered ex- empt from sales tax. "It will be a nice little extra stimulus check for wineries to pay for some of the grapes coming in," said Zack Scott, chief executive of- ficer at Petaluma, Calif.-based Scott Laboratories. "I'm pleased the BOE is working with us to make some- thing really complete." Some of the key determinations by the BOE include that yeast, ma- lolactic bacteria and additions like autolyzed yeast, enzymes, Lyso- zyme and pectinase are not subject to tax. Additionally, according to the BOE, several raw materials that "become a component part of the finished product" are also not sub- ject to tax, and these include oak chips or particles, sulfur dioxide, tartaric acid, potassium meta-bi- sulfite, nitrogen gas, potassium carbonate and several others. Because refunds may be eligible for purchases within the past three years, suppliers are facing the la- borious task of documenting and distributing those refunds. "We don't want to do this more than once," said José Santos, president of Enartis USA in Windsor, Calif. Sales tax refunds must be re- quested through the retailer, which in turn files a claim with the BOE. —Andrew Adams More Winemaking Products to be Tax Free "It will be a nice little extra stimulus check for wineries to pay for some of the grapes coming in." —Zack Scott, Scott Laboratories