By: Brad Berkman, Esq., and Louis J. Terminello, Esq.
Given the rates of consumption of alcoholic beverages in the U.S., specifically, the volume declines across all commodities, it may be wise for suppliers to consider markets abroad to sell their wares. Wine exports from the U.S. make up only a small percentage of wine sales, but markets such as Canada, Europe, Japan and the UK are active importers of U.S. produced wine. As a note, the U.S. Department of Agriculture reports that there was $1.27 billion in export value shipped from the U.S., with the top three markets being Canada with $459 million in exports, followed by the European Union with $167 million and the UK with $165 million in export value.
For those in the wine business who desire to enter the export market, this article examines some key topics regarding the export of alcoholic beverages, and in particular, wine, and essential elements required to remain in compliance with federal and state regulations.
The reader should bear in mind that the general concern of both the federal and state governments is the protection of excise tax revenue generated from the production and domestic sale of alcohol. When beverage alcohol is exported outside the U.S. or outside the borders of any state, no excise tax is imposed by either level of government. Simply stated, no excise tax liability exists for the export of beverage alcohol. However, strict rules apply and sufficient documentary evidence is required to support exportation; the absence of which will require the exporter to pay the tax that lawfully is not due. The examining auditor needs to be satisfied that a sufficient showing of export has been substantiated; a demand for payment of tax will be imposed.
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