Issue link: http://winesandvines.uberflip.com/i/830382
June 2017 WINES&VINES 31 VIEWPOINT gallons at their sites between 14% and 21% alcohol. Any wines that have alcohol content at or below 16% would need to be migrated in their records to the "table wine" tax class, which for still wines is 7%-16% alcohol. Once wineries make the above adjustments to their bulk and bottled inventory numbers by al- cohol content, they would likely show the sum of these gallons migrating from the 14%-21% cat- egory to the table wine tax class on the "change of tax class" lines of their 5120.17 report. A certain amount of these edits would fall on the shoulders of software providers for win- eries that use a database platform for tracking bulk and bottled wines that also generates the 5120.17 report. This would mean a somewhat simpler experience for winery staff. Winery staff's one responsibility would be to have an actual alcohol content assigned to each lot of wine in their database for the code update to read and then reassign any between 14% and 16% to the table wine category. The completion of the TTB excise tax re- port would change related to how the tax payment amounts are calculated, as discussed earlier. The excise tax amount would be cal- culated at the lower $1.07-per-gallon amount for wines up to 16% alcohol. The majority of wineries also would qualify to file under the SPTC, which would give them an additional $1/ 90 cents/53.5 cents per gallon deduction off their total excise tax bill, depending on their annual amount removed per year. Changes to wine label alcohols This last area is where everything comes to- gether. Wine labels list the alcohol content, which must match what a winery states on its 5120.17 report, upon which its excise tax rates are based. TTB regulations allow for tolerance ranges in relation to alcohol levels listed on wine labels. Currently that tolerance range is plus or minus 1.5% for wines below 14% al- cohol and plus or minus 1% for wines with alcohol levels more than 14%. The passage of this bill would mean a wine label could list an alcohol content of 15.5% and be considered a table wine, which would then mean the actual content could be as low as 14.0% and as high as 16.0%. Wineries regularly express concerns about the current tax cutoff point of 14% for the table-wine class. If a wine has an alcohol level hovering around 14%, the winery often takes a gamble related to what alcohol level it lists on the label, which is also the level on which it would base its payment of excise taxes. If the wine is labeled with 13.9% but is later sampled by the TTB and comes back with a 14.1% result, the winery would be liable for additional taxes due plus interest and could be required to relabel the wine with a corrected alcohol content. The change to 16% on the upper end of the table wine boundary would eliminate this concern as a regular issue. Wine- making styles have essentially outgrown the current still wine alcohol tax class boundaries during recent decades, so this change would largely be welcomed by winery staff. The provisions in the bill all bode well for the wine industry. If wineries already are orga- nized in how they track the alcohol content of each individual lot of bulk or bottled wine at their sites, once they have tallied and migrated any lots that would become part of the table wine tax class on their records and reports, their workflow would go back to business as usual. The next major result would be their excise tax payment amounts, which applies to payments made directly to the TTB and those paid indi- rectly to wine warehouses that file and pay excise taxes on their behalf. Ann Reynolds marks her 28th year in the Napa Valley wine industry this year. She started out in tasting rooms and spent two seasons in the winery lab at Beringer Vineyards. She has been managing winery compliance tasks since 1998 at wineries such as Sterling Vineyards, Robert Mondavi Winery, Viansa Winery, Caymus Vine- yards and Conundrum Winery. She taught winery com- pliance at Napa Valley College for nine years and wrote the book The Inside Story of a Wine Label. Her business, Wine Compliance Alliance, was founded in 2009. CHANGES TO THE SMALL- PRODUCER TAX CREDIT Winery B Example Annual sales: 145,000 gallons Wine: 15% ABV Gallons removed Excise tax amount Current With changes Up to 30,000 $20,100 $2,100 30,000 to 130,000 $94,000 $17,000 130,000 to 145,000 $23,550 $8,025 Total tax payments $137,650 $27,125 The small-producer tax credit (SPTC) currently cuts off at 100,000 gallons per year, which is reflected in the "current" column numbers above. ONLINEMARKETINGSYSTEM Wines Vines Analytics Visit winesandvines.com/OMS or call 866.453.9701 to set-up your free demo. Reach Thousands of Winery Decision Makers The Wines & Vines Online Marketing System is designed to help your business: • Increase sales • Generate winery leads • Manage clients and sales territories • Improve marketing effectiveness