Tennessee updates requirements for alcohol sellers and fulfillment houses
If you’re a licensed alcohol seller or fulfillment house, you should know about four new registration and reporting requirements in Tennessee:
- Duplicate sales invoices are no longer necessary for sales to wholesalers.
- Registration for alcoholic beverage taxes is now available through the Tennessee Department of Revenue online portal.
- There are new license and reporting requirements for fulfillment houses.
- There are new reporting requirements for wineries making direct-to-consumer (DTC) shipments
Duplicate sales invoices no longer necessary
Distillers, rectifiers, vintners, and importers selling distilled spirits or wine to licensed wholesalers in the state are no longer required to send the Tennessee Department of Revenue duplicate sales invoices as of March 18, 2022. This is due to the enactment of House Bill 2182 (Public Chapter Number 714).
However, licensees must still retain sales invoice records because the department may need to examine them. Records must be kept for at least three years.
Online registration for alcoholic beverage taxes available
Alcoholic beverage manufacturers, retailers, and wholesalers can now register for alcoholic beverage taxes through the Tennessee Department of Revenue online portal, Tennessee Taxpayer Access Point (TNTAP).
The department still accepts paper registrations though encourages registrants to utilize the online system.
New license and reporting requirements for fulfillment houses
Though most wine shipped directly to consumers in Tennessee, and indeed throughout the United States, is sent via fulfillment houses, Tennessee came close to banning the use of fulfillment houses in 2021. After learning how pivotal they are to the direct wine shipping industry, the Tennessee Legislature instead demanded more oversight for this channel. To that end, it tasked the Tennessee Alcoholic Beverage Commission (TABC) with creating a new fulfillment house license.
The TABC issued its first fulfillment house license in November 2021, shortly after opening a slick new application portal. Obtaining a license enables a fulfillment house to ship wine into or within Tennessee on behalf of winery direct shippers, provided the wine belongs to and is produced by the winery direct shipper licensee.
A fulfillment house licensee must:
- Acknowledge that it will only contract with common carriers that agree to make face-to-face deliveries to individuals at least 21 years of age (who must sign upon receipt of the wine)
- Consent to jurisdiction and venue of all actions in Tennessee
- Ensure all containers of wine shipped directly to individuals in Tennessee list the name, address, and license number of the licensee and are conspicuously labeled “SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED FOR DELIVERY”
- Identify all locations where the fulfillment house takes physical possession of wine for shipment into or within the state
Record-keeping and reporting requirements for fulfillment houses
Licensees are required to obtain certain information, including:
- The name, address, and license number of the winery direct shipper
- The name and FEIN of the common carrier
- The carrier tracking number
- The date of each shipment and delivery
- The quantity and product of wine shipped
- The name and address of the recipient
Fulfillment house licensees must retain this information for three years and submit copies of these records to the commission.
Licensees must report the above information quarterly, along with warehouse location, invoice date and number, brand name of products shipped, and sale price. For more details, see the Fulfillment House Quarterly Report Template (FHL-QR). The TABC also has a handy tutorial on fulfillment house quarterly reports.
Restrictions on fulfillment houses
The TABC will not issue a fulfillment house license to a common carrier, a nonresident seller, a winery or farm winery, or a wholesaler.
Securing a license doesn’t give a fulfillment house carte blanche. Fulfillment houses are prohibited from shipping wine on behalf of retailers (both in-state and out-of-state), unlicensed direct shippers, or “a person or entity that is not a licensed winery direct shipper.” And fulfillment house licensees may not deal in malt beverages or spirits. Visit the TABC for more information about fulfillment house licenses.
New reporting requirements for wineries making DTC shipments
Wineries shipping directly to consumers in Tennessee also have new reporting requirements as of January 1, 2022. Before shipping wine directly to consumers in the state, a winery must obtain a Direct Shipper License.
In order to qualify for a direct shipper license, a business must hold a federal basic permit and a license in its home state to manufacture, bottle, or rectify wine. Additionally, a DTC winery licensee must:
- Acknowledge in writing that it will only contract with common carriers that agree to make face-to-face deliveries to individuals who can demonstrate that they’re at least 21 years of age
- Consent to jurisdiction and venue of all actions in Tennessee (agree that all hearings, appeals, and other matters relating to its license will be held in Tennessee)
- Ensure all wine shipments are conspicuously labeled (i.e., visible from at least three feet away) with the statement “CONTAINS ALCOHOL: SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED FOR DELIVERY”
Record-keeping and reporting requirements for winery direct shipper licensees
Similar to fulfillment houses, winery direct shipper licensees are required to obtain the following information:
- The name, address, and license number of any fulfillment house used
- The name of the common carrier
- The carrier tracking number
- The date of each shipment
- The quantity, price, and product of wine shipped
- The name and address of the recipient
These records must be kept for three years and submitted to the commissioner on a quarterly basis.
Initially, the TABC planned to require winery direct shipper licensees to report the “warehouse location ID” and “date of delivery.” It later amended its requirements and “will not require winery direct shippers to submit data in these columns.” See the Direct Shippers Quarterly Report Template (DSP-QR) for more reporting requirements.
Restrictions on winery direct shippers
A winery direct shipper is only permitted to ship its own wine brands into Tennessee. However, a winery direct shipper can ship wine under a brand name owned or licensed to the winery that’s produced exclusively for the winery under an existing written contract, or wine produced and bottled exclusively for the winery.
A winery direct shipper may not ship more than 9 liters of wine to any one individual during any calendar month. Other restrictions are tied to how much wine the winery produces:
- A winery producing 270,000+ liters of wine per calendar year may not ship more than 27 liters of wine to any one individual in any calendar year
- A winery producing less than 270,000 liters of wine may ship up to 54 liters of wine to any one individual per calendar year
Finally, winery direct shipper licensees “may not avoid liability by subcontracting with a third party to perform its obligations to comply with license restrictions.” For more details, contact the TABC.
Avalara for Beverage Alcohol provides state-specific direct-to-consumer wine shipping rules and can help you identify and comply with DTC wine shipping regulations nationwide.
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