Wine tasting (and wine drinking, in general) has experienced a renaissance in recent years in the U.S. When you think of wine, you may inevitably think of regions of France, Italy, Spain, Argentina, and Germany, as well as Napa Valley in the U.S. But what about New York? A better question might be why not New York?
Outside of California, New York ranks third in grape acreage (behind the State of Washington) in the U.S. Not all of these grapes are grown for wine, but wine production and wineries are growing in the Empire State. How big is wine in New York? The state of New York is home to 320 wineries, the fourth largest in terms of number of wineries in the U.S. This number of wineries in the U.S. and in New York is expected to continue to grow, rising from 4,712 wineries in the U.S. in 2007, according to WineAmerica, to 7,762 wineries in 2013, according to Wine & Vines magazine.
State wine sales initiative
In the spirit of supporting the growth in agriculture and business that wine brings to the state, New York Governor Andrew Cuomo announced a “new” tax exemption on wine tastings. Prior to this announcement, it was commonly understood that New York’s Tax Law provided an exemption from sales taxes when the products are used “at an event sponsored by a winery, farm winery, wholesaler or importer at its licensed premises[.]” The exemption was not previously understood to cover general wine tastings on such seller’s premises.
While the exemption on wine tastings is not entirely new, the application of the sales tax exemption to general wine tastings held for a nominal fee or no fee at wineries, and on the premises of licensed wine wholesalers and importers is new. To effect this change, and to clarify the public’s understanding of the sales tax exemption provided under Section 1115(a)(33) of the Tax Law, the New York State Department of Taxation and Finance (the Department) worked with the Division of Alcoholic Beverage Control. The Department then published Technical Memorandum TSB-M-14(9)S (the Memorandum) to clarify the application of the exemption.
An “event” becomes more commonplace
The Memorandum clarified the understanding of what constitutes an “event” or “occasion” held by a winery, farm winery, wholesaler, or importer on such seller’s licensed premises. The event, according to the Memorandum, is simply the winery (or other sellers listed above) hosting a tasting on its licensed property in exchange for a nominal fee or no fee in accordance with Section 80 of the ABCL (Alcoholic Beverage Control Law). Note that the reach of this exemption is fairly narrow. This section does not allow the exemption to apply to tastings held off of the seller’s licensed property.
Wine tasting simplified
This “new” exemption not only benefits the consumer through cost savings, but it also makes pricing wine tastings more straightforward and relieves the wineries of some of the sales tax administrative duties associated with such wine tastings (no more collecting, recording, and remitting sales taxes on small wine tasting fees). Nonetheless, note that sales tax still applies to the actual purchase of bottles and cases of wine, as well as wine by the glass if served in a way that does not qualify as a tasting under the ABCL.
If your winery has any questions regarding this recent clarification to the sales tax law, please contact us.