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S1447................................................by JUDICIARY AND RULES
TAXATION - BEER/WINE - Amends existing law to revise the tax imposed upon
beer and wine; to define "wholesale sales price"; to impose a surcharge; to
provide for credits and refunds; and to provide that any wholesaler or
brewer who sells to a retailer beer upon which taxes have not been paid
shall be guilty of a misdemeanor.
03/15 Senate intro - 1st rdg - to printing
03/16 Rpt prt - to Loc Gov
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-seventh Legislature Second Regular Session - 2004
IN THE SENATE
SENATE BILL NO. 1447
BY JUDICIARY AND RULES COMMITTEE
1 AN ACT
2 RELATING TO TAXATION AND TAX REVENUES; AMENDING SECTION 23-1008, IDAHO CODE,
3 TO REVISE DESCRIPTIVE LANGUAGE, TO REVISE THE TAX IMPOSED UPON BEER, TO
4 DEFINE "WHOLESALE SALES PRICE," TO IMPOSE A SURCHARGE, TO PROVIDE FOR CRE-
5 DITS AND REFUNDS, TO PROVIDE THAT ANY WHOLESALER OR BREWER WHO SELLS TO A
6 RETAILER BEER UPON WHICH TAXES HAVE NOT BEEN PAID SHALL BE GUILTY OF A
7 MISDEMEANOR, TO PROVIDE CORRECT TERMINOLOGY, TO PROVIDE REFERENCES TO
8 SURCHARGES AND TO MAKE TECHNICAL CORRECTIONS; AND AMENDING SECTION
9 23-1319, IDAHO CODE, TO REVISE DESCRIPTIVE LANGUAGE, TO REVISE THE TAX
10 IMPOSED UPON WINE, TO DEFINE "WHOLESALE SALES PRICE," TO IMPOSE A SUR-
11 CHARGE AND TO MAKE TECHNICAL CORRECTIONS.
12 Be It Enacted by the Legislature of the State of Idaho:
13 SECTION 1. That Section 23-1008, Idaho Code, be, and the same is hereby
14 amended to read as follows:
15 23-1008. TAX -- SURCHARGE -- REFUNDS -- DISTRIBUTION -- RULES -- REPORTS.
16 (1) A tax of four dollars and sixty-five cents ($4.65) per barrel of
17 thirty-one (31) gallons, and a like rate for any other quantity or frac-
18 tion thereof, is hereby levied and imposed upon each and every barrel of
19 beer sold for use within the state of Idaho. (a) On and after July 1,
20 2004, there is levied and there shall be collected a tax upon the whole-
21 sale sale of beer in this state at the rate of three percent (3%) of the
22 wholesale sales price of such beer. For purposes of this section,
23 "wholesale sales price" means the net invoice price for which the beer is
24 sold to the retailer, exclusive of any rebates or discounts for prompt
25 payment. Such tax shall be imposed at the time the wholesaler or brewer
26 ships or transports beer to retailers in this state to be sold by those
27 retailers and shall be paid by the wholesaler or brewer who sells such
28 beer to the retailer. In the case of beer sold at retail by a brewer, the
29 tax imposed by this section shall be three percent (3%) of the brewer's
30 costs of goods sold, computed in accordance with the provisions of the
31 Internal Revenue Code, as defined in section 63-3004, Idaho Code, relating
32 to income taxation. Sales of beer by a wholesaler or brewer for the pur-
33 pose of and resulting in export of beer from this state for resale outside
34 this state shall be exempt from the taxes on beer imposed by this chapter.
35 (b) In addition to the tax set forth in subsection (a) of this section, a
36 surcharge equal to two percent (2%) of the wholesale sales price of beer
37 shall be imposed and shall be distributed as follows:
38 (i) An amount of money shall be distributed to the state refund
39 account sufficient to pay current refund claims. All refunds autho-
40 rized by law to be paid by the tax commission shall be paid through
41 the state refund account and those moneys are continuously appropri-
42 ated;
43 (ii) The balance remaining after distributing the amount in para-
2
1 graph (b)(i) of this subsection shall be distributed as follows:
2 (A) Sixty-eight percent (68%) shall be distributed to the com-
3 munity mental health services fund, which is hereby created in
4 the state treasury. The fund shall be administered by the
5 department of health and welfare for use by Idaho counties for
6 purposes of community intervention in the treatment of mentally
7 ill individuals. Moneys in the community mental health services
8 fund may be expended pursuant to appropriation;
9 (B) Sixteen percent (16%) shall be distributed to the cata-
10 strophic health care cost fund, created in section 57-813, Idaho
11 Code; and
12 (C) Sixteen percent (16%) shall be distributed to the alcohol
13 beverage control fund, which is hereby created in the state
14 treasury. The fund shall be administered by the Idaho state
15 police for purposes of ensuring compliance with alcohol beverage
16 laws and rules. Moneys in the alcohol beverage control fund may
17 be expended pursuant to appropriation.
18 (c) Every sale of beer by a wholesaler or brewer to a retailer shall con-
19 stitute a sale of beer for resale or consumption in this state, whether
20 the sale is made within or without this state, and such wholesaler or
21 brewer shall be liable for the payment of taxes.
22 (d) When beer has been destroyed by breakage or has spoiled or otherwise
23 become unfit for beverage purposes prior to payment of taxes or surcharges
24 on it, the wholesaler or brewer, upon satisfactory proof of destruction or
25 spoilage, shall be entitled to deduct from existing inventories, subject
26 to tax and surcharge, the amount of beer so destroyed or spoiled.
27 (e) If the tax commission determines that any amount due under this chap-
28 ter has been paid more than once or has been erroneously or illegally col-
29 lected or computed, the commission shall set forth that fact in its
30 records and the excess amount paid or collected may be credited on any
31 amount then due and payable to the commission from that person and any
32 balance refunded to the person by whom it was paid or to his successors,
33 administrators or executors. The commission is authorized and the state
34 board of tax appeals is authorized to order the commission in proper cases
35 to credit or refund such amounts whether or not the payments have been
36 made under protest and certify the refund to the state board of examiners.
37 (f) No credit or refund shall be allowed or made after three (3) years
38 from the time the payment was made, unless before the expiration of that
39 period a claim is filed by the taxpayer. The three (3) year period allowed
40 by this subsection for making refunds or credit claims shall not apply in
41 cases where the tax commission asserts a deficiency of tax imposed by law,
42 and taxpayers desiring to appeal or otherwise seek a refund of amounts
43 paid in obedience to deficiencies must do so within the time limits else-
44 where prescribed by law.
45 (g) Any wholesaler or brewer who shall sell to any retailer beer, upon
46 which the tax or surcharge herein imposed has not been paid and any person
47 who shall purchase, receive, transport, store or sell any beer upon which
48 the tax or surcharge herein imposed has not been paid, shall be guilty of
49 a misdemeanor, and any beer so purchased, received, transported, stored or
50 possessed or sold shall be subject to seizure by the commission, any
51 inspector or investigator of the commission, or by any sheriff, constable
52 or other police officer, and same may be removed and kept for evidence.
53 Upon conviction of any person for violation of this section, the said
54 beer, and all barrels, kegs, cases, cartons and cans containing the same
55 shall be forfeited to the state of Idaho, and, in addition, the person so
3
1 convicted shall be subject to the other penalties in this act chapter pre-
2 scribed.
3 (h) Beer and all barrels, kegs, cases, cartons or cans so forfeited to
4 the state of Idaho shall be sold by the commission at public auction to
5 any brewer, wholesaler or retailer, licensed under the provisions of this
6 act chapter, making the highest bid. Such sale shall be held at such place
7 and time as may be designated by the commission after reasonable notice
8 thereof given in such manner and for such time as the commission may by
9 regulation rule prescribe. From the purchase price received upon such
10 sale, the commission shall first deduct an amount sufficient to pay the
11 tax or surcharge due on such beer, and to pay all costs incurred in con-
12 nection with such sale. The commission shall deposit the balance remaining
13 with the state treasurer, who shall place the same in the general account
14 of the state of Idaho, and it shall become a part thereof.
15 (2) The revenues received from the taxes imposed by subsection (1)(a) of
16 this section, and any interest, penalties, or deficiency payments imposed by
17 this section, shall be distributed as follows:
18 (a) An amount of money shall be distributed to the state refund account
19 sufficient to pay current refund claims. All refunds authorized by law to
20 be paid by the tax commission shall be paid through the state refund
21 account and those moneys are continuously appropriated.
22 (b) The balance remaining after distributing the amount in paragraph (a)
23 of this subsection shall be distributed as follows:
24 (i) Twenty percent (20%) shall be distributed to the alcoholism
25 treatment account;
26 (ii) Thirty-three percent (33%) shall be distributed to the perma-
27 nent building account; and
28 (iii) The remainder shall be distributed to the general account.
29 (3) The commission is empowered, and it shall be the commission's duty to
30 prescribe rules: and regulations:
31 (a) For reports by carriers for hire and also all other carriers owned
32 and/or employed, directly or indirectly, by out of state brewers, dealers
33 or other persons, of all deliveries of beer in and into the state of
34 Idaho, stating especially the origin and destination of the beer, the
35 quantity thereof, and also the names and addresses, respectively of the
36 consignors and consignees.
37 (b) For reports by out of state brewers and manufacturers of beer, of all
38 shipments by them of beer into the state of Idaho, stating especially the
39 matters mentioned in paragraph (a) of this subsection.
40 SECTION 2. That Section 23-1319, Idaho Code, be, and the same is hereby
41 amended to read as follows:
42 23-1319. EXCISE TAX -- SALES INCLUDED -- REFUND FOR EXPORT SALES --
43 REFUND FOR BREAKAGE OR SPOILAGE -- DISTRIBUTION OF REVENUE -- SURCHARGE. Upon
44 all wines sold by a distributor or winery to a retailer or consumer for use
45 within the state of Idaho pursuant to this act there is hereby imposed an
46 excise tax of forty-five cents (45ยข) per gallon (1) On and after July 1, 2004,
47 there is levied and there shall be collected a tax upon the wholesale sale of
48 wine in this state at the rate of two and one-tenth percent (2.1%) of the
49 wholesale sales price of such wine. For purposes of this section, "wholesale
50 sales price" means the net invoice price for which the wine is sold to the
51 retailer, exclusive of any rebates or discounts for prompt payment. Such tax
52 shall be imposed at the time the distributor or winery ships or transports
53 wine to retailers in this state to be sold by those retailers and shall be
4
1 paid by the distributor or winery which sells such wine to the retailer. In
2 the case of wine sold at retail by a winery, the tax imposed by this section
3 shall be two and one-tenth percent (2.1%) of the winery's costs of goods sold,
4 computed in accordance with the provisions of the Internal Revenue Code, as
5 defined in section 63-3004, Idaho Code, relating to income taxation. Sales of
6 wine by a distributor or winery for the purpose of and resulting in export of
7 wine from this state for resale outside this state shall be exempt from the
8 taxes on wine imposed by this chapter.
9 (a2) Every sale of wine by a distributor to a retailer shall constitute a
10 sale of wine for resale or consumption in this state, whether the sale is made
11 within or without this state, and the distributor shall be liable for the pay-
12 ment of taxes. In every transfer of wine by a licensed winery to its licensed
13 retail outlet, the winery shall be liable for payment of taxes.
14 (b3) When wine has been destroyed by breakage or has spoiled or otherwise
15 become unfit for beverage purposes prior to payment of taxes on it, the dis-
16 tributor, upon satisfactory proof of destruction or spoilage, shall be enti-
17 tled to deduct from existing inventories, subject to tax, the amount of wine
18 so destroyed or spoiled.
19 (c4) If the tax commission determines that any amount due under this
20 chapter has been paid more than once or has been erroneously or illegally col-
21 lected or computed, the commission shall set forth that fact in its records
22 and the excess amount paid or collected may be credited on any amount then due
23 and payable to the commission from that person and any balance refunded to the
24 person by whom it was paid or to his successors, administrators or executors.
25 The commission is authorized and the state board of tax appeals is authorized
26 to order the commission in proper cases to credit or refund such amounts
27 whether or not the payments have been made under protest and certify the
28 refund to the state board of examiners.
29 (d5) No credit or refund shall be allowed or made after three (3) years
30 from the time the payment was made, unless before the expiration of that
31 period a claim is filed by the taxpayer. The three (3) year period allowed by
32 this subsection for making refunds or credit claims shall not apply in cases
33 where the tax commission asserts a deficiency of tax imposed by law, and tax-
34 payers desiring to appeal or otherwise seek a refund of amounts paid in obedi-
35 ence to deficiencies must do so within the time limits elsewhere prescribed by
36 law.
37 (e6) All revenue received from the taxes imposed pursuant to this chapter
38 subsection (1) of this section shall be distributed as follows:
39 (1a) An amount of money shall be distributed to the state refund account
40 sufficient to pay current refund claims as authorized in subsection (c4)
41 of this section and those moneys are continuously appropriated.
42 (2b) The balance remaining after distributing the amount in paragraph
43 (1a) of this subsection shall be distributed as follows:
44 (i) Twelve percent (12%) shall be distributed to the alcoholism
45 treatment account;
46 (ii) Five percent (5%) shall be distributed to the Idaho grape grow-
47 ers and wine producers commission account; and
48 (iii) The remainder shall be distributed to the general account.
49 (7) In addition to the tax set forth in subsection (1) of this section, a
50 surcharge equal to two percent (2%) of the wholesale sales price of wine shall
51 be imposed and shall be distributed as follows:
52 (a) An amount of money shall be distributed to the state refund account
53 sufficient to pay current refund claims as authorized in subsection (4) of
54 this section and those moneys are continuously appropriated.
55 (b) The balance remaining after distributing the amount in paragraph (a)
5
1 of this subsection shall be distributed as follows:
2 (i) Sixty-eight percent (68%) shall be distributed to the community
3 mental health services fund, created in section 23-1008, Idaho Code;
4 (ii) Sixteen percent (16%) shall be distributed to the catastrophic
5 health care cost fund, created in section 57-813, Idaho Code; and
6 (iii) Sixteen percent (16%) shall be distributed to the alcohol bev-
7 erage control fund, created in section 23-1008, Idaho Code.
8 (f8) Any person who is not a distributor or winery but who makes, whether
9 as principal, agent or broker, any sales of wine not otherwise taxed under
10 this section and not exempt from such tax, shall be liable for payment of
11 taxes imposed by this section. This subsection shall not impose tax on wine
12 sold pursuant to section 23-1336, Idaho Code.
STATEMENT OF PURPOSE
RS14271
This legislation changes the basis of excise taxation on beer and
wine from volume-based to the more fair and equitable method of
price-based. More importantly, it stops the further erosion in the
beer and wine excise tax base as follows:
In 1961, the last time the excise tax on beer was changed,
the excise tax on an average-priced can of beer was eleven
percent (11%). Today it has eroded to two percent (2%).
Expressed in terms of the actual tax on a can of beer, the
excise tax was 1.4 cents per can in 1961 and remains at 1.4
cents per can today. This tax has remained frozen for 43
years.
In 1971, the last time the excise tax on wine was changed,
the excise tax on an average-prices bottle of wine was nine
percent (9%). Today it has eroded to two percent (2%). This
tax has remained frozen for 33 years.
This legislation also imposes a 2% surcharge on wholesale sales of
beer and wine for the purpose of funding costs attributable to the
use or abuse of these products.
FISCAL NOTE
Conversion to Price-Based: The conversion from volume to price-
based excise tax is designed to produce the same amount of excise
tax paid by the beer and wine wholesale distributors in FY2005 as
they paid in FY2004. In the future excise tax revenues will
increase as beer and wine sales prices increase.
The conversion wholesale tax rate of 3% for beer, and 2.1% for wine
was selected based upon an analysis of the historical volume of
beer and wine distributed in the state, a general understanding of
the marketplace, and certain information supplied by the wholesale
industry. Actual wholesale beer and wine sales information is not
publicly known at this time. With this bill, the excise tax rates
on beer and wine will be treated the same.
Under the volume-based method, higher priced beer and wine products
pay a lower percentage of excise tax on value than the lower-priced
beer and wine. This legislation levels that playing field.
The following table shows the distribution of the excise tax:
Distribution of Tax on Beer: Percent Dollars
Alcoholism Treatment Fund 20% $ 836,600
Perm Bldg Fund 33% 1,380,400
General Fund 47% 1,966,000
3% Tax on Beer 100% $4,183,000
Distribution of Tax on Wine: Percent Dollars
Alcoholism Treatment Fund 12% $ 285,000
Grape Growers/Wine 5% 118,700
General Fund 83% 1,971,100
2.1% Tax on Wine 100% 2,374,800
TOTAL EXCISE TAX/DISTRIBUTION $6,557,800
Surcharge on Wholesale Price of Beer & Wine: The 2% surcharge authorized
in this bill will be dedicated to pay the treatment costs of alcohol-related
mental and physical illnesses. The funding will also be dedicated for law
enforcement and regulatory functions needed to reduce the illegal use
of alcohol.
Distribution of 2% Surcharge on
Wholesale Price on Beer & Wine: Percent Dollars
Community Mental Health Services 68% $3,400,000
Catastrophic Health Care Fund 16% 800,000
Alcohol Beverage Control Fund 16% 800,000
TOTAL SURCHARGE/DISTRIBUTION 100% $5,000,000
Contact: Senator Hal Bunderson, 332-1000
Senator Joe Stegner, 332-1000
Statement of Purpose/Fiscal Impact S 1447