Fun tax facts for National Beer Day – Wacky Tax Wednesday

Anyone saddened that Oktoberfest has come and gone take heart: National American Beer Day falls on its heels. On Oct. 27, 2017, Americans are encouraged to celebrate this unofficial holiday by imbibing new or favorite brews, at home or out. It’s the perfect time to swap unusual beer tax tales with your friends — and with federal, state, and local taxes accounting for “more than 40 percent of what American beer drinkers pay for a beer,” there’s plenty to say.

Read on for a few of my favorites.

A less taxing way to travel. Thanks to the enactment of House Bill 3101, it’s now possible to purchase beer (and wine) on certain passenger buses in Texas. The sale and preparation of the alcoholic beverages by the holder of a Texas passenger bus beverage permit are exempt from sales and use tax and any other taxes imposed under the Alcoholic Beverage Code. As of May 29, 2017, instead of taxing the passengers, the state taxes the sale to the qualifying passenger bus company.

It’s a good thing, too. According to Alex Danza, founder and president of a premium bus service that services major metropolitan areas in the Lone Star State, there’s at last a “level playing field with airline carriers and roadways.” Plus, it’s good for people suffering from cenosillicaphobia. (Lifting my pint here to Kelly Phillips Erb, aka Taxgirl, for introducing me to the term for fear of an empty glass.)

Location, location, location. Texas imposes mixed beverage sales tax and mixed beverage gross receipts tax on the sale, preparation, or service of alcoholic beverages and mixes (i.e., nonalcoholic beverages and ice mixed with an alcoholic beverage) consumed on the premises of a mixed beverage permittee. Mixed beverage taxes apply also to beer, ale, and wine sold and consumed on the premises of a mixed beverage permittee. But sales of beer, ale, or wine sold and consumed on the premises of a wine and beer retailer’s permittee are subject to Texas sales and use tax only, not the mixed beverage taxes.

For here or to go. A Texas brewpub license allows the holder to sell beer and ale (for both on-premises and off-premises consumption) produced at the brewpub. Texas sales tax applies to sales made under a brewpub license. However, a brewpub that also holds a mixed beverage permit (for liquor sales) must instead apply the mixed beverage taxes to sales of beer and ale sold for consumption on premises. Beer and ale sold to go are subject to Texas sales tax only, not the mixed beverage taxes.

Drink your beer upstate. The sale or use of beer (and cider, liquor, and wine) in New York State is subject to an excise tax. Beer sold in New York City is also subject to an additional excise tax, as is liquor containing more than 24 percent alcohol by volume. Curiously, the special NYC tax doesn't apply to wine and cider.

Some like it hoppy. New York provides a sales tax exemption for food items purchased by alcoholic beverage producers and used in producing alcoholic beverages, including grains and hops. Alcoholic beverage producers that are also farmers benefit from a more expansive production exemption (applicable to balers, harvesters, irrigation management software, etc.). However, once farm production has ceased, machinery or equipment used to process the products used in beer (e.g., hops) qualifies only for the general production exemption.

Although Washington provides a sales tax exemption for fertilizer purchased by a farmer who produces an agricultural product for sale, it doesn't exempt coir yarn, a ropelike material used by hops farmers to grow hop vines. Coir hair is widely used to enrich soils, but according to the Washington Department of Revenue, “The fact that after such use the yarn is plowed into the ground with the harvested vines does not make it exempt of sales/use tax as a fertilizer.”

Have any beer tax tales of your own? Add them to the comments below. Cheers!