Virginia changes license fees and cider taxation
- Jul 25, 2018 | Avalara
Editor’s Note: The following is a guest post by Mary Beth Williams. Mary Beth is the President of Williams Compliance, a compliance services provider based in Hanover County, Virginia.
There have been some big changes in Virginia in the last few weeks. As of July 1, 2018, both application fees and Wine Shippers License fees have gone up. The fees for all new applications was raised from $65 to $195. This is only applicable to new applications submitted, not for renewal applications.
The annual license for Wine Shippers Licenses was also raised from $95 to $230. This is an annual fee and your next renewal invoice will show this higher fee.
Cider Tax Changes
There was some confusion as to the tax rate of flavored ciders. After discussion with the regulators, it was determined that so long as a cider otherwise meets the definition of cider under the Virginia Code (see below for definition), the product should be categorized as cider rather than wine, regardless of whether TTB allows cider or wine on the label. That means that these products are subject to a $.08/liter excise tax rather than the $.40/liter tax due on wine. As ciders, these products can also be sold to a wine wholesaler OR beer wholesaler, and may be sold to retail licensees which hold wine, beer, or mixed beverage licenses. Wines may only be sold to wine wholesalers, and beer retail licensees may not carry these products.
Under Virginia law, “Cider” is defined as:
“Any beverage, carbonated or otherwise, obtained from the fermentation of the natural sugar content of apples or pears (i) containing not more than 10 percent of alcohol by volume without chaptalization or (ii) containing not more than 7 percent alcohol by volume regardless of chaptalization.”
Does it impact you? Check the Virginia ABC’s Product Label Approval website to see if any of your products were classified as wines but should actually be ciders. Search your licensed name with wine as the “product type” and see if any of your products are categorized as wine. If there are products listed as wine where the fermentation was just apples or pears and your ABV is within the limits stated in the definition, you can ask for the product classification to be corrected. Use the following process to correct the mis-categorization. If you are getting ready to submit flavored ciders for product approval in Virginia, the process is below for you to follow to make sure the products are categorized correctly, and that you’re paying the right tax.
For Existing Flavored Products:
- The name and product number of the product at issue
- Signed statement stating that your product is made from the fermentation of apples or pears, that flavorings are added post fermentation, and that the addition of flavorings has a negligible impact on the alcohol content of the product. If your product has an ABV between 7 and 10%, you also need to include a statement that there was made without chaptalization in order to qualify as a cider.
- Analysis of how much has been overpaid ($.40/liter v. $.08/liter) in previously submitted excise taxes, if applicable
- Name and license number of Virginia wholesaler(s) who distribute the product in Virginia, if any.
For New Flavored Products:
- Provide the regular application package
- Provide a signed statement stating that your product is made from the fermentation of apples or pears, that flavorings are added post fermentation, and that the addition of flavorings has a negligible impact on the alcohol content of the product. If your product has an ABV between 7 and 10%, you also need to include a statement that there was made without chaptalization in order to qualify as a cider.
As it stands now, co-ferments with any other fruit would have to be classified as a wine, as would any product with an ABV over 10%. For co-ferments with hops or other items that wouldn’t contribute to the alcohol in the product, you’ll need to approach those with VA ABC on a case by case basis.