By: Louis J. Terminello, Esq. and Jaci P. Flug, Esq.
Licensees such as restaurants, liquor stores, grocery stores, and wineries are increasing their use of e-commerce ordering platforms to connect with new consumer markets. Most licensees engage with more than one platform. Licensees doing diligence on platforms must consult more than alcohol regulations when checking for compliance. Licensees must also examine sales and local tax collection.
Since the Supreme Court case South Dakota v. Wayfair in 2018, forty-eight states have enacted marketplace facilitator laws requiring e-commerce platforms, not sellers, to collect and remit state and local taxes. While state ABC boards once strongly believed that only licensees could collect customer payments of taxes on beverage alcohol, marketplace facilitator laws make no distinction between beverage alcohol and other items. Marketplace facilitator laws are deemed to apply to beverage alcohol sales.
This is a massive adjustment for retailers and wineries who now must track several paths for sales tax collection. Sellers of beverage alcohol must track their in-store sales tax collection, any e-commerce sales done directly by them, and e-commerce sales facilitated by each platform they engage with. Due diligence should also include the way the platform/marketplace collects the tax payments from customers. While marketplace facilitator laws place liabilities for tax payments with the marketplace facilitator, all licensed sellers should aim to avoid lengthy audits.