Noah Vinter
California's excise tax on alcohol is a per-gallon tax collected on the sale, distribution, or importation of alcoholic beverages in the state. The California Department of Tax and Fee Administration (CDTFA) collects the tax and administers the program in cooperation with the California State Board of Equalization. The alcoholic beverage tax applies to beer, wine, and liquor, with rates depending on the percentage of alcohol in the product. For example, the excise tax on wine is $0.20 per gallon, while the tax on liquor is $3.30 per gallon. Excise taxes are typically paid by merchants directly to the California government, and these taxes are often passed on to customers through higher prices for the taxed goods. This guide will provide an overview of the alcoholic beverage excise tax in California, including registration requirements, tax rates, and payment options.
| Characteristics | Values |
|---|---|
| Tax collection authority | California Department of Tax and Fee Administration (CDTFA) |
| Administered by | California State Board of Equalization (BOE) |
| Registration | Required for licenses issued by the California Department of Alcoholic Beverage Control (ABC) |
| Payment options | Online, payment methods available on the website |
| Payment deadline | By the due date to be considered timely |
| Payment methods | Electronic funds transfer (EFT) for taxpayers with an estimated average monthly tax liability of $20,000 or more |
| Late payment penalty | $50 late-file penalty |
| Tax rates | $0.20 per gallon of wine, $3.30 per gallon of liquor, varies for beer |
| Tax exemptions | Disaster relief, exported goods, specific uses |
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What You'll Learn
Alcohol excise tax rates in California
Alcohol excise taxes in California are collected on the sale, distribution, or importation of alcoholic beverages in the state. The tax is levied per gallon and applies to wine, beer, and liquor. Wine vendors, for example, are responsible for paying a state excise tax of $0.20 per gallon, plus federal excise taxes, for all wine sold.
The California Department of Tax and Fee Administration (CDTFA) collects the tax and administers the Alcoholic Beverage Tax Program in cooperation with the State Board of Equalization. The program's revenues are deposited into the Alcohol Beverage Control Fund and are used to fund state and local services and programs. The CDTFA provides a Tax Guide for Alcoholic Beverage Tax to help businesses understand their tax obligations and compliance requirements.
Out-of-state vendors shipping beer into California are required to hold a Certificate of Compliance issued by the California Department of Alcoholic Beverage Control (ABC) and file a monthly report detailing all shipments of beer into the state. Similarly, customs brokers of alcoholic beverages must file a monthly report on all transactions of alcoholic beverages into California. These reports are typically due on or before the 15th of each month following the reporting period.
Common carriers and holders of interstate alcoholic beverage transporters' permits are also required to file monthly reports on all deliveries of alcoholic beverages to California-licensed importers or customs brokers. These reports are typically due on or before the 15th of the month following the reporting period. Excise taxes are generally due on the 15th of the month following the end of the reporting period and can be paid online or through various payment options offered by the CDTFA.
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Who must pay the tax
The California excise tax is levied on the sale, distribution, or importation of alcoholic beverages in California. The tax is collected by the California Department of Tax and Fee Administration (CDTFA) and is administered in cooperation with the California State Board of Equalization.
In general, you must register for the Alcoholic Beverage Tax if you are required to obtain any of the following licenses issued by the California Department of Alcoholic Beverage Control (ABC):
- Beer Vendor (Certificate of Compliance Holder)
- Craft Distiller
- Customs Broker
- Distilled Spirits Manufacturer's Agent
- Importer (Beer and Wine; Beer and Distilled Spirits)
Out-of-state vendors shipping beer into California are required to hold a Certificate of Compliance from the ABC and file a monthly report detailing all shipments of beer into the state. Similarly, common carriers and holders of interstate alcoholic beverage transporters' permits transporting alcoholic beverages into California must file a monthly report disclosing all deliveries to California-licensed importers or customs brokers.
The excise tax on distilled spirits is typically paid by wholesalers based on sales to in-state retailers. However, sellers of distilled spirits are responsible for paying the tax if the wholesaler has not already done so. For beer and wine, the excise tax is generally due when it leaves the manufacturer's facility or is removed from the internal revenue-bonded premise, unless it is sold and delivered to another beer manufacturer or wine grower in California, exported out of state, or otherwise exempt.
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How to register
In California, excise taxes on alcohol are collected on the sale, distribution, or importation of alcoholic beverages. The California Department of Tax and Fee Administration (CDTFA) collects the tax and administers the program in cooperation with the California State Board of Equalization.
To register for the California excise tax on alcohol, you must first determine if you are required to obtain a license from the California Department of Alcoholic Beverage Control (ABC). The ABC issues licenses for various activities related to the sale and distribution of alcoholic beverages, including:
- Beer Vendor (Certificate of Compliance Holder): This license is required for vendors selling beer in California and must be obtained from the ABC.
- Craft Distiller: For those involved in the distillation and production of alcoholic beverages.
- Customs Broker: This license is necessary for individuals or businesses facilitating the import and export of alcoholic beverages, including customs declarations and clearance.
- Distilled Spirits Manufacturer's Agent: If you represent or work on behalf of manufacturers of distilled spirits, this license is required.
- Importer (Beer and Wine; Beer and Liquor): If you are importing alcoholic beverages into California, you will need this license. This includes both beer and wine as well as liquor imports.
Once you have determined the specific license(s) you need from the ABC, you can proceed with the registration process:
- Apply for the relevant license(s) with the California Department of Alcoholic Beverage Control (ABC). You will need to provide detailed information about your business, the types of alcoholic beverages you deal with, and the nature of your involvement in the industry (e.g., manufacturing, distribution, or retail).
- After receiving your license(s) from the ABC, the CDTFA will notify you of the specific Alcoholic Beverage Tax Account type you are required to register for. This account type will be specific to your license and activities in the alcoholic beverage industry.
- Complete the registration process with the CDTFA by providing the necessary information and documentation. This may include details about your business structure, ownership, tax identification numbers, and the volume of alcoholic beverages you produce, distribute, or sell.
- Obtain any additional permits or licenses, such as a seller's permit, if you are involved in the direct sale of alcoholic beverages to consumers.
- Familiarize yourself with the tax reporting and payment requirements, including due dates and the frequency of filings. Excise taxes are generally due on a monthly basis, and common carriers and importers must adhere to specific reporting deadlines.
- Ensure that you comply with all labeling and packaging requirements, especially for direct-to-consumer (DTC) shipments. Excise taxes are typically included in the price of the product and paid by the merchant before the goods are sold.
By following these steps, you can register for the California excise tax on alcohol and ensure compliance with the tax obligations specific to the alcoholic beverage industry in California.
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Payment options
The California Department of Tax and Fee Administration (CDTFA) collects the excise tax on alcoholic beverages and administers the program in cooperation with the California State Board of Equalization. The alcoholic beverage tax is a per-gallon excise tax collected on the sale, distribution, or importation of alcoholic beverages in California.
If you are filing online, you can file and pay your alcoholic beverage tax due in one transaction. You can also visit the website to make a payment or learn about the various payment options. Payments must be submitted by the due date to be considered timely.
If you have an estimated average monthly tax liability of $20,000 or more, you are required to pay amounts due by electronic funds transfer (EFT). If you are required to make payments by EFT, you will be notified in writing. In this case, if you initiate your payment on the tax due date, you must complete your transaction by 3:00 p.m. Pacific time to ensure your funds are deposited into the CDTFA's bank account by the next banking day.
If you file a late return or make a late payment, you may be assessed a late-file penalty of $50.
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Tax exemptions
California collects excise taxes on the sale, distribution, or importation of alcoholic beverages in the state. The excise tax on beer is $0.20 per gallon, while for wine it is also $0.20 per gallon, and for liquor, it is $3.30 per gallon. These rates are already included in the purchase price by the retailer. Excise taxes are typically not deductible on California income tax returns or federal tax returns. However, the IRS occasionally permits the deduction of certain excise taxes for specific tax years.
The State of California offers tax relief for businesses affected by disasters. The California Department of Tax and Fee Administration (CDTFA) provides a State of Emergency Tax Relief page with instructions on how to apply for relief. Additionally, property owners impacted by California fires or other disasters may be eligible for property tax relief through the Disaster Relief webpage.
For out-of-state vendors shipping beer into California, tax exemptions apply if the beer is exported from the state. In such cases, a Certificate of Compliance from the California Department of Alcoholic Beverage Control (ABC) is required, along with a monthly report detailing all shipments into California.
Common carriers and holders of interstate alcoholic beverage transporters' permits are mandated to file a monthly report on all deliveries of alcoholic beverages to California-licensed importers or customs brokers. These entities are also required to file a tax return if they sell distilled spirits in California.
Beginning January 1, 2024, Senate Bill 388 introduced changes to the Alcoholic Beverage Tax Program, allowing taxpayers to opt out of the public disclosure of information contained in their beer manufacturer returns and accompanying schedules.
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Frequently asked questions
The Alcoholic Beverage Tax Program is run by the California Department of Tax and Fee Administration (CDTFA) and the State Board of Equalization (BOE). The program collects taxes on the sale, distribution, or importation of alcoholic beverages in California.
In general, you must register for the Alcoholic Beverage Tax Program if you are required to obtain one or more of the following licenses issued by the California Department of Alcoholic Beverage Control (ABC):
- Beer Vendor (Certificate of Compliance Holder)
- Craft Distiller
- Customs Broker
- Distilled Spirits Manufacturer’s Agent
- Importer (Beer and Wine; Beer and)
You can pay your alcoholic beverage tax online, where you can also file your tax return in one transaction. You can also visit the CDTFA website to learn about other payment options.
Payments must be submitted by the due date to be considered timely. If you are a taxpayer with an estimated average monthly tax liability of $20,000 or more, you are required to pay by electronic funds transfer (EFT). If you are required to pay by EFT, you must complete your transaction by 3:00 p.m. Pacific time on the tax due date to ensure your funds are deposited by the next banking day.
