A Toast: No More Double Tax on Wine

March 29th, 2011 by Kim Lenz

RICHMOND – Beginning July 1, Virginia wineries will have less to “wine” about: They will no longer be taxed twice when shipping to customers out of state.

Virginia law adds a shipping tax to wine and other alcoholic beverages sent to wholesalers and consumers within the state. The tax also applies to wine shipped to individuals – but not wholesalers – out of state.

As a result, under current law, Virginia wineries can be taxed twice when they ship wine to out-of-state customers: once by Virginia and again by the receiving state.

House Bill 1979, sponsored by Delegate Thomas “Tag” Greason, R-Potomac Falls, aims to fix that problem. It will exempt wineries from the tax when they ship wine to residents of another state.

Patrick Cushing, who became director of the Virginia Wine Council last May, was told that Chateau Morrisette, one of the largest wineries in Virginia, had contacted his predecessor concerning the issue of double taxation on out-of-state shipments to consumers.

“I did a lot of research on it, and it really was a problem,” Cushing said. “I put together some sample legislation and our board approved it.”

It was too late for Cushing to pursue the issue during the General Assembly’s 2010 session. But this year, Cushing was able to help ensure passage of House Bill 1979 and its companion bill, Senate Bill 1083, sponsored by Sen. Emmett Hanger Jr., R-Mount Solon.

The House and Senate approved both bills unanimously. Gov. Bob McDonnell signed them into law on March 18.

Curtis Coleburn, the chief operating officer of the Virginia Department of Alcoholic Beverage Control, said the new law could allow Virginia wineries to sell their wine a few cents cheaper, attracting more out-of-state buyers. Or it could allow wineries to make a slightly higher profit, Coleburn said.

In either case, the law will reduce the amount of money that wineries must pay the ABC.

Robert “Bob” Burgin, the executive vice president and general manager of Chateau Morrisette Inc., said in an email that wineries could save as much as 7.4 percent on an average $120 case of wine.

“To a winery like Chateau Morrisette, that’s a significant enough margin to seek the change in the Virginia statutes,” Burgin said.

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