Shipping Wines from Napa Valley: California Online Wine Retailers and Sales Tax
- November 28, 2015 | Stephanie Faris
California is known for its fine wine. With 90 percent of America’s wine coming from our third-largest state, shipping is an important part of every winery’s business model. However, shipping across state lines can be tricky, from honoring other states’ liquor laws to dealing with local laws when it comes to transporting liquor on roadways. Some states are off limits completely when it comes to interstate wine deliveries.
For California wineries that work those details out, shipping can bring serious income. But once you start shipping wine to online customers, you’ll also need to face the complicated issue of sales tax. Here’s what you need to know if you’re shipping wine from your California winery.
State Sales Tax on Wine
Wine and grapes are big business for the State of California, with Napa County accounting for 52 percent of all of the wines produced in California in 2011. For Californians, the sales tax on wine can vary from 8 to 10 percent, depending on the area. Napa County-area wineries are on the low end of that, at 8 percent.
California is one of the few states that are origin based, which means taxes are charged based on the winery’s location, rather than the buyer’s. However, California makes things a little more complicated with its modified origin system (see below).
As online shopping has grown in popularity, Napa Valley wineries have the opportunity to ship to customers around the globe. And retailers and restaurants aren’t the only ones having wines shipped from California: Consumers can now have some of the best wines in the world delivered directly to their homes.
When selling online, you are responsible for calculating sales tax on every bottle of wine you ship, whether it's being shipped across the state or across the country. If you're shipping wine to customers in states other than California, you'll need to apply those states' tax rules to your sale.
Modified Origin Sales Tax
In California, business owners must separate state, county, and city taxes from district transaction taxes. District transaction taxes are destination-based in California, which means sales tax in the state is a combination of both origin- and destination-based.
The good news is that district taxes are usually fairly small. In Napa County, for instance, district tax is only 0.50 percent, but it goes as high is 1.00 percent in Palm Springs. California businesses will need to set up their systems to calculate their state, county, and city taxes, and then add the district tax of the area where the item will be shipped. In Napa Valley, this means charging 7.50 percent California tax in addition to the district tax that is charged at the destination.
For Napa Valley’s finest wineries, online sales can bring a powerful source of revenue. Once you’ve worked out the details of local regulations and sales tax, you can set up a fulfillment system that processes orders efficiently and helps consumers across the country enjoy the best wines.