NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9523
TITLE OF BILL: An act to amend the tax law, in relation to farm
winery and farm distillery sales tax information return filing require-
PURPOSE OF THE BILL:
The bill would exclude licensed farm wineries and farm distilleries from
the sales tax information return filing requirements imposed by Tax Law
§ 1136 (i).
SUMMARY OF PROVISIONS:
Section 1 of the bill would amend Tax Law § 1136 (i) to exclude persons
operating pursuant to a farm winery license or a farm distillery license
issued by the State Liquor Authority ("SLA"), or pursuant to both such
licenses, from the obligation to file the annual information return
required by that subdivision.
Section 2 of the bill provides for an immediate effective date and
applies the law to annual returns due on and after March 20, 2012.
Tax Law § 1136(i) requires "wholesalers," as defined in Alcoholic Bever-
age Control Law ("ABCL") § 3, that have made certain sales of an alco-
holic beverage without collecting sales and use tax, to file annual
information returns with the Department of Taxation and Finance ("DTF")
that include the identity of any customers that qualify as sales tax
vendors, and the volume of sales made to them. Both farm distilleries
and farm wineries are covered by this requirement if they make sales to
persons who may, in turn, make retail sales as permitted pursuant to
retail licenses. See ABCL §§ 61(2-c), 76-a (3).
PRIOR LEGISLATIVE HISTORY:
This is a new bill.
STATEMENT IN SUPPORT:
The third-party sales tax reporting provisions require wholesalers to
report all sales made to restaurants, bars and other retailers. DTF uses
this information to verify sales as reported by those retailers. While
farm wineries and farm distilleries that sell to retailers technically
qualify as wholesalers, the burden imposed on them by the filing
requirement outweighs any benefits received by the DTF. Farm wineries
and farm distilleries are by definition, small. A farm winery license
limits the holder to producing no more than 150,000 gallons annually. A
farm distillery license limits the holder to producing no more than
35,000 gallons annually.
Because of their restricted size, it is difficult for farm wineries and
farm distilleries to absorb the cost of complying with the annual filing
requirement. Exempting them will not undermine the effectiveness of the
third-party reporting legislation, because purchases from farm wineries
and farm distilleries account for a very small percentage of retailers'
overall purchases. Moreover, farm wineries and farm distilleries are
required to maintain sales records pursuant to requirements imposed by
the SLA, which DTF may obtain upon request.
The amendments would take effect immediately and would apply to annual
returns due on and after March 20, 2012.
STATE OF NEW YORK
March 8, 2012
Introduced by M. of A. FARRELL -- (at request of the Department of Agri-
culture and Markets) -- read once and referred to the Committee on
Ways and Means
AN ACT to amend the tax law, in relation to farm winery and farm distil-
lery sales tax information return filing requirements
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subparagraph (C) of paragraph 1 of subdivision (i) of
2 section 1136 of the tax law, as added by section 1 of subpart G of part
3 V-1 of chapter 57 of the laws of 2009, is amended to read as follows:
4 (C) Every wholesaler, as defined by section three of the alcoholic
5 beverage control law, if it has made a sale of an alcoholic beverage, as
6 defined by section four hundred twenty of this chapter, without collect-
7 ing sales or use tax during the period covered by the return, except (i)
8 a sale to a person that has furnished an exempt organization certificate
9 to the wholesaler for that sale; or (ii) a sale to another wholesaler
10 whose license under the alcoholic beverage control law does not allow it
11 to make retail sales of the alcoholic beverage. For each vendor, opera-
12 tor, or recipient to whom the wholesaler has made a sale without
13 collecting sales or compensating use tax, the return must include the
14 total value of those sales made during the period covered by the return
15 (excepting the sales described in clauses (i) and (ii) of this subpara-
16 graph) and the vendor's, operator's or recipient's state liquor authori-
17 ty license number, along with the information required by paragraph two
18 of this subdivision. A person operating pursuant to a farm winery
19 license as provided in section seventy-six-a of the alcoholic beverage
20 control law, or a person operating pursuant to a farm distillery license
21 as provided in subdivision two-c of section sixty-one of such law, or a
22 person operating pursuant to both such licenses, shall not be subject to
23 any of the requirements of this subdivision.
24 § 2. This act shall take effect immediately and shall apply to annual
25 returns due on and after March 20, 2012.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
 is old law to be omitted.