Do you sell or distribute tobacco, beer or wine to retailers? Or, do you purchase tobacco, beer or wine to sell at retail? If so, we highly recommend that you read this blog.
Effective July 1, 2018, Alabama has new legislation requiring distributors of beer and wine to file monthly informational reports on any beer or wine sales made to retail licensees for which an exemption from sales or use tax collection was claimed at the time of the sale. A “seller” is a manufacturer, wholesaler, or distributor of beer, wine or tobacco products who sells to a retailer (licensee) in this state. The term also includes a wholesale club or warehouse club that sells tobacco or alcohol under a membership. Informational reporting is not a new process for distributors of tobacco. However, the act requires more detailed information in their monthly reporting.
The first informational monthly report will cover sales occurring on or after July 1, 2018 through July 31, 2018 was due on or before August 20, 2018. For each month after, the informational report will be due on or before the 20th day of the month next succeeding the month in which sales occur. This is not a replacement for sales tax returns where the entity also has sales tax return filing requirements. If you are required to comply with the new reporting requirements and need our assistance, our SALT group will be glad to help you get started. Please contact Kim Smith or Rachel Aaron.
The information returns are required to be filed on the MAT system using a .CSV file. Instructions and a template are available for further instruction on how and what to submit. The following is a list of reporting requirements:
- Invoice date
- Invoice number
- Retailer’s (licensee’s) ABC Board beverage license number
- Retailer’s (licensee’s) sales tax account number (optional)
- Retailer’s (licensee’s) name
- Retailer’s (licensee’s) street address
- Retailer’s (licensee’s) city
- Retailer’s (licensee’s) state
- Retailer’s (licensee’s) zip code
- Total invoice dollar amount.
You may ask, how does this affect my business if we purchase beer, wine, and tobacco for the purpose of selling the products at retail? The Alabama Department of Revenue will be totaling the retail purchases from all distributors provided on the information reports, add an assumed 35% markup, and then will compare the total purchases with markup to the sales tax returns filed by the retailer. Since the sales tax returns do not require separating beer, wine & tobacco sales, we are not yet sure how this comparison will work. We want you to be prepared to for notices that could be issued as a result. Here are some suggestions for being proactive:
- If you are a distributors of beer, wine and/or tobacco, please be aware of the new reporting requirements and request assistance when needed.
- When possible, retailers should maintain monthly records of purchases and sales separated by the effected categories. This will allow a quick and easy response to notices from ADOR regarding matching of sales to purchases from distributors.
- Retailers should also revisit their markup on beer, wine and tobacco products and be able to justify whether or not they are selling their products at a 35% markup. It is very difficult to prove a markup percentage so you will need to take steps to be able to verify a markup less than 35% on these items.
- Consideration will also need to be given to timing of purchases vs. sales. If you are a retailer, be prepared to explain longer holds in inventory. Also, any employee or customer theft should be documented.
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