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H0454......................................................by STATE AFFAIRS WINERIES - Amends existing law to provide that wineries that sell and ship to Idaho residents must obtain a permit, pay taxes and comply with specified shipping requirements; to provide for procedures and rules and exchange of information between the Idaho State Police and the State Tax Commission; and to provide for imposition of the wine excise tax upon all wines sold and shipped directly to Idaho state residents by an out-of-state wine manufacturer holding a wine direct shipper permit. 01/24 House intro - 1st rdg - to printing 01/25 Rpt prt - to St Aff 02/07 Rpt out - rec d/p - to 2nd rdg 02/08 2nd rdg - to 3rd rdg 02/09 Ref'd to Rev/Tax 02/13 Rpt out - rec d/p - to 3rd rdg 02/15 3rd rdg - PASSED - 62-0-8 AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer, Bell, Bilbao, Block, Boe, Bolz, Brackett, Bradford, Cannon, Chadderdon, Clark, Collins, Crow, Deal, Denney, Edmunson, Ellsworth, Eskridge, Field(18), Field(23), Garrett, Hart(Jacobson), Harwood, Henbest, Henderson, Jaquet, Kemp, Lake, Loertscher, Martinez, Mathews, McGeachin, McKague, Miller, Moyle, Nielsen, Nonini, Pasley-Stuart, Pence, Ring, Ringo, Roberts, Rusche, Rydalch, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail, Wills NAYS -- None Absent and excused -- Bedke, Black, LeFavour, Mitchell, Raybould, Sali, Wood, Mr. Speaker Floor Sponsor - Deal Title apvd - to Senate 02/16 Senate intro - 1st rdg - to St Aff 02/20 Rpt out - rec d/p - to 2nd rdg 02/21 2nd rdg - to 3rd rdg 03/02 3rd rdg - PASSED - 32-1-2 AYES -- Andreason, Brandt, Broadsword, Burkett, Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis, Fulcher, Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst, Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce, Richardson, Stegner, Stennett, Sweet, Werk NAYS -- Schroeder Absent and excused -- Bunderson, Williams Floor Sponsors - Lodge & Stennett Title apvd - to House 03/03 To enrol 03/06 Rpt enrol - Sp signed 03/07 Pres signed 03/08 To Governor 03/11 Governor signed Session Law Chapter 29 Effective: 07/01/06
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature Second Regular Session - 2006 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 454 BY STATE AFFAIRS COMMITTEE 1 AN ACT 2 RELATING TO THE DIRECT TO CONSUMER SALE AND SHIPMENT OF WINE BY WINERIES; 3 AMENDING SECTION 23-1309A, IDAHO CODE, TO PROVIDE THAT WINERIES THAT SELL 4 AND SHIP TO IDAHO RESIDENTS MUST OBTAIN A PERMIT, PAY TAXES AND COMPLY 5 WITH SPECIFIED SHIPPING REQUIREMENTS AND TO PROVIDE FOR PROCEDURES AND 6 RULES AND THE EXCHANGE OF INFORMATION BETWEEN THE STATE POLICE AND THE 7 STATE TAX COMMISSION; AND AMENDING SECTION 23-1319, IDAHO CODE, TO PROVIDE 8 FOR IMPOSITION OF THE EXCISE TAX UPON ALL WINES SOLD AND SHIPPED DIRECTLY 9 TO IDAHO STATE RESIDENTS BY AN OUT-OF-STATE WINE MANUFACTURER HOLDING A 10 WINE DIRECT SHIPPER PERMIT AND TO MAKE A TECHNICAL CORRECTION. 11 Be It Enacted by the Legislature of the State of Idaho: 12 SECTION 1. That Section 23-1309A, Idaho Code, be, and the same is hereby 13 amended to read as follows: 14 23-1309A. RECIPROCAL INTERSTATESHIPMENT AND RECEIPT OF WINE AUTHORIZED 15 -- LABELING REQUIREMENT. (1) Any resident of this state who is at least16 twenty-one (21) years of age is entitled to receive not more than two (2)17 cases of wine per month for personal use, containing not more than nine (9)18 liters per case, from another state without payment of state tax, fees or19 charges if the state from which the wine is sent allows its residents to20 receive wine from this state without imposition of state tax, fees or charges.21 For tax purposes, receipt of a shipment into this state under this subsection22 shall not be considered to constitute a sale in this state. No person who23 transports wine pursuant to this subsection shall deliver more than two (2)24 cases of wine to the same address at one (1) time. No person who receives wine25 pursuant to this subsection shall resell any of the wineNotwithstanding any 26 other provision of law, rule or regulation to the contrary, any holder of a 27 winery license under section 23-1306, Idaho Code, or any person holding a 28 license to manufacture wine in another state who obtains a wine direct shipper 29 permit pursuant to this section may sell and ship up to twenty-four (24) nine- 30 liter cases of wine annually directly to a resident of Idaho, who is at least 31 twenty-one (21) years of age, for the resident's personal use and not for 32 resale. 33 (2) Before sending any shipment to a resident of Idaho, the wine direct 34 shipper permit holder must: 35 (a) File an application with the director; 36 (b) Pay a fifty dollar ($50.00) annual registration fee if the winery is 37 not currently licensed by the director; 38 (c) Provide the director its Idaho winery license number or a true copy 39 of its current alcoholic beverage license issued by another state; 40 (d) Obtain from the director a wine direct shipper permit; 41 (e) Register with the state tax commission for the payment of sales and 42 use taxes and excise taxes on wine sold to residents of Idaho under the 43 wine direct shipper permit. 2 1 (3) A wine direct shipper permit authorizes the permit holder to do all 2 of the following: 3 (a) Sell and ship not more than twenty-four (24) nine-liter cases of wine 4 annually to any person twenty-one (21) years of age or older for his or 5 her personal use and not for resale; 6 (b) Ship wine directly to a resident in this state only in compliance 7 with subsections (8) and (9) of this section; 8 (c) Report to the director, no later than January 31 of each year, the 9 total amount of wine shipped during the preceding calendar year under the 10 wine direct shipper permit; 11 (d) If the permit holder is located outside this state, pay to the state 12 tax commission all sales and use taxes, and excise taxes on sales to resi- 13 dents of Idaho under the wine direct shipper permit. For excise tax pur- 14 poses, all wine sold pursuant to a direct shipper permit shall be deemed 15 to be wine sold in this state; 16 (e) Permit the director and the state tax commission to perform an audit 17 of the wine direct shipper permit holder's records upon request; 18 (f) Be deemed to have consented to the jurisdiction of the alcohol bever- 19 age control division of the Idaho state police, or any other state agency 20 and the Idaho courts concerning enforcement of this section and any 21 related laws, rules or regulations. 22 (4) A wine direct shipper permit holder located outside the state may 23 annually renew its permit with the director by paying a twenty-five dollar 24 ($25.00) renewal fee and providing the director a true copy of its current 25 alcoholic beverage license issued in another state. A wine direct shipper 26 permit holder located in Idaho shall renew its wine direct shipper permit in 27 conjunction with its license to manufacture wine. All registration fees and 28 renewal fees shall be shared equally by the state police and the state tax 29 commission. 30 (5) The director may enforce the requirements of this section by adminis- 31 trative proceedings or suspend or revoke a wine direct shipper permit, and the 32 director may accept payment of an offer in compromise in lieu of suspension, 33 such payments to be determined by rule promulgated by the director. 34 (6) Sales and shipments of wine directly to consumers in Idaho from wine 35 manufacturers in Idaho or in another state who do not possess a current wine 36 direct shipper permit are prohibited. Any person who knowingly makes such a 37 shipment is guilty of a misdemeanor. 38 (7) A licensee who holds a license for the retail sale of wine for con- 39 sumption off the licensed premises may ship not more than two (2) cases of 40 wine, containing not more than nine (9) liters per case, per shipment, for 41 personal use and not for resale, directly to a resident of another state if 42 the state to which the wine is sent allows residents of this state to receive 43 wine sent from that state without payment of additional state tax, fees or 44 charges. The sale shall be considered to have occurred in this state. 45 ( 38) The shipping container of any wine sent into or out of this state46 shipped under this section must be clearly labeled to indicate that the con- 47 tainer contains alcoholic beverages and cannot be delivered to a person who is 48 not at least twenty-one (21) years of age. 49 ( 49) For the purposes of out-of-state shipmentswine shipped under this 50 section to an Idaho resident, the delivery person shall: 51 (a) Have the person who receives the wine shipment sign for it; and 52 (b) Not make deliveries to anyone who is under twenty-one (21) years of 53 age or to anyone who is visibly intoxicated; and 54 (c) Keep the signature record for one (1) year. 55 ( 510) Sales authorized under this section are sales made by a retailer who 3 1 is not authorized to sell at wholesale or sales by a winery of wine produced 2 or bottled by the winery. 3 (11) The director and the state tax commission may promulgate rules to 4 effectuate the purposes of this section and are authorized to exchange neces- 5 sary information to implement the provisions of this section. 6 SECTION 2. That Section 23-1319, Idaho Code, be, and the same is hereby 7 amended to read as follows: 8 23-1319. EXCISE TAX -- SALES INCLUDED -- REFUND FOR EXPORT SALES -- 9 REFUND FOR BREAKAGE OR SPOILAGE -- DISTRIBUTION OF REVENUE. Upon all wines 10 sold by a distributor or winery to a retailer or consumer and upon all wines 11 sold and shipped directly to Idaho state residents by an out-of-state wine 12 manufacturer holding a wine direct shipper permit under section 23-1309A, 13 Idaho Code, for use within the state of Idaho pursuant to this actchapter 14 there is hereby imposed an excise tax of forty-five cents (45¢) per gallon. 15 Sales of wine by a distributor or winery for the purpose of and resulting in 16 export of wine from this state for resale outside this state shall be exempt 17 from the taxes on wine imposed by this chapter. 18 (a) Every sale of wine by a distributor to a retailer shall constitute a 19 sale of wine for resale or consumption in this state, whether the sale is made 20 within or without this state, and the distributor shall be liable for the pay- 21 ment of taxes. In every transfer of wine by a licensed winery to its licensed 22 retail outlet, the winery shall be liable for payment of taxes. 23 (b) When wine has been destroyed by breakage or has spoiled or otherwise 24 become unfit for beverage purposes prior to payment of taxes on it, the dis- 25 tributor, upon satisfactory proof of destruction or spoilage, shall be enti- 26 tled to deduct from existing inventories, subject to tax, the amount of wine 27 so destroyed or spoiled. 28 (c) If the tax commission determines that any amount due under this chap- 29 ter has been paid more than once or has been erroneously or illegally col- 30 lected or computed, the commission shall set forth that fact in its records 31 and the excess amount paid or collected may be credited on any amount then due 32 and payable to the commission from that person and any balance refunded to the 33 person by whom it was paid or to his successors, administrators or executors. 34 The commission is authorized and the state board of tax appeals is authorized 35 to order the commission in proper cases to credit or refund such amounts 36 whether or not the payments have been made under protest and certify the 37 refund to the state board of examiners. 38 (d) No credit or refund shall be allowed or made after three (3) years 39 from the time the payment was made, unless before the expiration of that 40 period a claim is filed by the taxpayer. The three (3) year period allowed by 41 this subsection for making refunds or credit claims shall not apply in cases 42 where the tax commission asserts a deficiency of tax imposed by law, and tax- 43 payers desiring to appeal or otherwise seek a refund of amounts paid in obedi- 44 ence to deficiencies must do so within the time limits elsewhere prescribed by 45 law. 46 (e) All revenue received pursuant to this chapter shall be distributed as 47 follows: 48 (1) An amount of money shall be distributed to the state refund account 49 sufficient to pay current refund claims as authorized in subsection (c) of 50 this section and those moneys are continuously appropriated. 51 (2) The balance remaining after distributing the amount in paragraph (1) 52 of this subsection shall be distributed as follows: 4 1 (i) Twelve percent (12%) shall be distributed to the alcoholism 2 treatment account; 3 (ii) Five percent (5%) shall be distributed to the Idaho grape grow- 4 ers and wine producers commission account; and 5 (iii) The remainder shall be distributed to the general account. 6 (f) Any person who is not a distributor or winery but who makes, whether 7 as principal, agent or broker, any sales of wine not otherwise taxed under 8 this section and not exempt from such tax, shall be liable for payment of 9 taxes imposed by this section. This subsection shall not impose tax on wine 10 sold pursuant to section 23-1336, Idaho Code.
STATEMENT OF PURPOSE RS 15478C1 In a recent United States Supreme Court ruling requiring equal treatment of in-state and out-of-state wineries in the direct shipment of wine to consumers, Idaho's law needs to be changed to a permit state from a reciprocal state. This change would be equally beneficial to Idaho wineries as to out-of-state wineries. This proposal will establish a permit system that applies the same rules to all wineries, regardless of location. This proposal would increase the collection of sales and excise taxes on wine shipped to Idaho consumers and establish greater public safeguards to prevent wine shipments to minors. It also will create a licensing requirement and fee to support oversight of wine shipments. This will also eliminate the potential for a legal challenge to our existing law. FISCAL NOTE Potentially, a positive impact to the general fund through additional license fees and excise and sales tax revenues will be realized. Contact Name: Roger Seiber, Wine Institute Phone: (208) 342-8900 STATEMENT OF PURPOSE/FISCAL NOTE H 454