Tennessee Alcoholic Beverages and Beer Tax Guide - September 2018 - TN.gov
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Tennessee
Alcoholic Beverages and
Beer Tax Guide
September 2018TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Dear Tennessee Taxpayer,
This publication is designed to help taxpayers better understand the Tennessee taxes on alcoholic
beverages and beer, including the collection and remittance of the taxes. The taxes on alcoholic
beverages and beer are a part of the Tennessee tax structure. You may find compliance easier when
you know more about these taxes. Please take time to acquaint yourself with how these taxes may
apply to you. This guide to the taxes on alcoholic beverages and beer does not have the effect of
law but is intended as an informal reference for taxpayers who wish to gain a better understanding
of the requirements of the Tennessee taxes on alcoholic beverages and beer. It is not an all-inclusive
document. The tax guide is not intended as a substitute for the statutes or Rules and Regulations
concerning Tennessee taxes on alcoholic beverages and beer, nor is it intended to be a statement of
Department of Revenue policy. The information in this guide is current as of the date of publication
but could change as the tax laws, their interpretation, and their application do change from time to
time because of legislative action, reviews, and court decisions.
Periodically, registered taxpayers are mailed information letters with updates on tax laws and
policies. Be sure to read any letter you receive carefully; this information may save you time and
money. Informational publications are also available for specific industries. Contact the Taxpayer
Services Division to obtain these publications.
The Department of Revenue offers a toll free tax information line for Tennessee residents. The
number is (800) 342-1003. Nashville or out-of-state callers may call (615) 253-0600. The Department
of Revenue also offers a telecommunications device for the deaf (TDD) line at (615) 741-7398.
In addition, the Department of Revenue offers a HOT LINE number for the exclusive use of tax
practitioners. In-state practitioners may call toll free (800) 397-8395. Nashville and out-of-state
callers phone (615) 253-0700.
If you have questions, please do not hesitate to contact any of the offices listed below.
Sincerely,
Taxpayer Services Division
Tennessee Department of Revenue Toll Free: (800) 342-1003
Taxpayer Services Division Out-of-State: (615) 253-0600
Andrew Jackson Building TDD: (615) 741-7398
500 Deaderick Street
Nashville, Tennessee 37242-1099
Regional Offices
Memphis: Chattanooga: Jackson:
3150 Appling Road 1301 Riverfront Parkway Lowell Thomas State Office Building
Bartlett, TN 38133 Suite 203 225 Dr. Martin L. King Jr. Drive
(901) 213-1400 Chattanooga, TN 37402 Suite 340
(423) 634-6266 Jackson, TN 38301
(731) 423-5747
1TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Regional Offices (continued)
Johnson City: Knoxville
204 High Point Drive 7175 Strawberry Plains Pike
Johnson City, TN 37601 Suite 209
(423) 854-5321 Knoxville, TN 37914
(865) 594-6100
2TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Changes to the Alcoholic Beverages and Beer Tax Guide for 2018
(1) Liquor stores and grocery stores are permitted to sell alcoholic beverages every day of the week.
Sales are allowed on Sundays and holidays, except for Easter, Thanksgiving, and Christmas.
Effective for retail liquor stores on April 20, 2018
Effective for grocery stores on January 1, 2019
(2) Generally, there is a minimum 10% markup on sales of liquor and wine at liquor stores.
(3) No new liquor store licenses will be issued until July 2, 2021, though existing licenses may be
transferred to another entity. (Page 9)
(4) Common carriers that contract with direct shippers are required to report deliveries of wine,
beer, and other alcoholic beverages to the Department, though direct shipment of beverages
other than wine is not authorized. (Page 10)
(5) Samples and sales of alcoholic beverages sold for consumption on the premises of a distillery
are not subject to LBD. (Page 12)
(6) There is a new LBD license for for-profit festival operators for the sale of alcohol for
consumption on the premises of festivals. (Page 14)
3TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Table of Contents
Alcoholic Beverage Commission 7
Powers and Duties of the Commission 7
Licensing Procedures 8
License Classifications 8
Alcoholic Beverage Collectors 9
Wine Direct Shippers 9
Shipment of Wine Reporting 10
Winery Licenses 10
Wine Festivals 11
Wine Sales in Grocery Stores 11
Manufacturers and Distillers 11
High Alcoholic Beer Manufacturers 12
Privilege Tax on Manufacturers 13
Sales of Alcohol for Consumption on the Premises 14
Local Referendum Required 14
Application Procedure 14
Bond Requirement 15
Taxes and Fees 15
Tax on Gross Sales 16
Commercial Airlines, Paddlewheel Steamboats, and Passenger Trains 16
Art Galleries 16
Wine Sales at Satellite Locations 16
Self-Distribution Permits for Farm Wine Permit Holders 17
Restrictions on the Disposition of Alcoholic Beverages 18
Wine or Spirits Used in Food Preparation 18
Reports to the Commissioner 18
Inclusion of liquor by the drink tax in menu price 19
Returns and Payment 19
Extension 19
Failure to File Timely Returns 19
Records 20
Transfer of Business Ownership 20
Mixing Bar Tax 22
Exceptions 22
Returns and Payment 22
Records 22
Brand Registration 23
“Brand” Defined 23
The Measure of the Tax 23
Introduction of a New Brand 24
Failure to Register a New Brand 24
Transfer of Brands 24
High Alcohol Content Beer 25
4TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Table of Contents
Wholesale Gallonage Tax 26
Liability 26
The Measure of the Tax 26
Exceptions 26
Payment 26
Records 27
Documenting Credits from Gross Sales 27
Sales to Other Wholesalers 27
Returns or Exports 27
House Breakage 27
Sacramental Wine 27
Loss by Fire or Act of Nature 28
Military Sales 28
Wholesaler’s Bond Requirement 28
Transportation of Alcoholic Beverages 29
Transporter’s Bond Requirement 29
Documents Required for Shipment 29
Wholesale Case Tax on Alcoholic Beverages 30
Returns and Payment 30
Beer and Alcoholic Beverages Containing Up To 8% Alcohol
(Effective January 1, 2017) 31
Registration of Manufacturers and Wholesale Distributors 31
Failure to Register 31
County or City Permit Required 31
Classification of Counties 32
Resale Certificate 32
Application for Permit 32
Annual Privilege Tax 33
Notice to Permit Holders 33
Licenses to Sell Outside of Town or City Limits 33
Bonds – Warehousemen, Dealers, and Manufacturers 34
Barrels Tax 35
Liability for the Tax 35
Purchase of Beverages 35
Enforcement of the Tax 35
Exempt Sales 36
Credit for Military Sales 36
Payment of the Tax 36
Delinquent Payment of the Tax 36
Records 36
5TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Table of Contents
Wholesale Beer Tax 38
The Levy of the Tax 38
Exemption for Military Sales 38
Adjustments 38
Damaged Containers 38
Out-of-state Shipments 39
Repurchase of Previously Sold Beverages 39
Gifts or Discounts 39
Payment of the Tax 39
Delinquent Returns 40
Cash Sales 40
Wholesale Price List 40
Changes in Wholesale Price 40
Designated Sales Territories 41
Change of Wholesaler 41
Wholesaler’s Bond 42
Records and Reports 42
Investigations 42
Miscellaneous Fees and Permits 44
Municipal Inspection Fee 44
Non-resident Seller’s Permit 44
Inspections of Permit Holders 44
Employee and Server Permits 45
Transportation of Beer and Other Such Beverages 46
Liability for Tax on Goods Damaged in Transit 46
Change of Consignee or Delivery Destination 46
Transportation without Payment of Tax 46
Contraband 47
Notification of Seizure 48
Claims Procedure 48
Designation of Hearing Officer 49
Release of Goods to Claimant 49
Commissioner’s Ruling 50
Hearing Costs and Fees 50
General Information 52
Filing Date for Returns 52
Penalties and Penalty Waivers 52
Interest 52
Right to a Conference 52
Audits and Assessment 53
The Taxpayer Bill of Rights 54
6TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Alcoholic Beverage Commission
[Tenn. Code Ann. § 57-1-102]
+ “High alcoholic content beer” – An
The Alcoholic Beverage Commission is alcoholic beverage which is beer, ale, or
established by law as the licensing and other malt beverage having an alcoholic
regulatory body for all persons wishing to content of more than 8% (5% prior to
engage in the manufacturing, distilling, January 1, 2017) by weight and not more
mixing, or selling of beverages containing than 20% by weight, except wine, as
certain percentages of alcohol. The scope of defined in Tenn. Code Ann. § 57-3-101,
this regulation encompasses these beverages: that is brewed, regulated, distributed or
sold, provided that no more than 49% of
+ “Alcoholic beverage” or “beverage” - the overall alcoholic content of such
Includes alcohol, spirits, liquor, wine, beverages may be derived from the
high alcoholic content beer, and every addition of flavors and other
liquid containing alcohol, spirits, or wine nonbeverage ingredients containing
and capable of being consumed by a alcohol.
human being, other than patent
medicine, or beer where the latter The Alcoholic Beverage Commission consists
contains an alcoholic content of 8% (5% of three members appointed by the governor.
prior to January 1, 2017) by weight or The Commission has authority to appoint a
less. It includes any liquid product director, assistant director, and a chief law
containing distilled alcohol, capable of enforcement officer who serves under the
being consumed by a human being, supervision of the director. No person is
made with distilled alcohol no matter eligible to be appointed to, or employed by,
what the alcoholic content. Products or the commission if that person or any family
beverages containing less than 0.05% member has any interest, financial or
alcohol by volume, other than wine as otherwise, either direct or indirect, in any
defined in Tenn. Code Ann. § 57-3-101, distillery, wholesale dealer, retail dealer, or
shall not be considered to be alcoholic building occupied by any such dealer licensed
beverages and shall not be subject to as such in the state of Tennessee. Nor may
regulation or taxation under Tenn. Code any member of the commission own stock or
Ann. Title 57. any interest in such activity.
+ “Wine” - The product of the normal
alcoholic fermentation of the juice of Powers and Duties of the Commission
fresh, sound, ripe grapes, with the usual
cellar treatment and necessary The Commission is authorized to adopt and
additions to correct defects due to promulgate the rules and regulations that
climatic, saccharine, and seasonal pertain to alcoholic beverages. The
conditions, including champagne, commission may alter, amend, or repeal any
sparkling and fortified wine of an parts of the rules and regulations as it deems
alcoholic content not to exceed 21% by necessary. The commission may promulgate
volume. No other product may be called rules governing the conduct of educational
“wine” unless designated by appropriate seminars conducted by businesses licensed
prefixes descriptive of the fruit or other under Tenn. Code Ann. § 57-3-204. [Tenn.
product from which the beverage was Code Ann. § 57-1-209]
predominantly produced, or an artificial
or imitation wine.
7TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Alcoholic Beverage Commission
(continued)
employment. If a license or permit has
The commission is authorized to investigate been issued, the commission shall issue
and/or arrest, without warrant or process, any a citation to the licensee or permittee to
person who the arresting officer has probable show cause why the license or permit
cause to believe is committing or attempting should not be suspended or revoked. All
to commit a felony in violation of Title 39, data, written statements, affidavits,
Chapter 17, Part 4, if the felony is committed evidence, or other documents
on premises licensed by the commission, on submitted in support of an application
any premises under investigation by the are a part of the application.
commission in conjunction with its other + Make, alter, amend, or repeal rules and
duties and responsibilities, or any other regulations and prescribe all forms of
premises selling alcoholic beverages as application, licenses, and tax stamps,
defined in Tenn. Code Ann. § 57-3-101, and of all reports and other papers and
whether licensed or unlicensed. [Tenn. Code documents required in the enforcement
Ann. § 57-1-210] of Tenn. Code Ann. Title 57.
Licensing Procedures License Classifications
[Tenn. Code Ann. § 57-3-104]
The Alcoholic Beverage Commission may
The Commission has the authority, by and issue, under provisions of state law, the
with the consent of the governor, to: classes of licenses and permits listed below.
Beer permits are issued by the respective city
+ Employ persons necessary for the or county government where the
effective administration and establishment seeking the license is located.
enforcement of state law. It has the duty Licenses and permits issued by the Alcoholic
and power to issue all licenses in Beverage Commission are:
respect to, or for, the manufacture,
importation, bottling, keeping, giving + Manufacturer’s, distiller’s, or rectifier's
away, furnishing, possession, license
transportation, sale, and delivery of + Liquor wholesaler’s license
alcoholic beverages, and to revoke any + Liquor retailer’s license
license whatsoever, that it has the + Winery license [Tenn. Code Ann. § 57-3-
authority to issue. 207]
+ Refuse to issue a license or permit if, + Nonresident seller’s permit [Tenn. Code
upon investigation, it finds that the Ann. § 57-3-605]
applicant for a license or permit has + Employee and server permits [Tenn.
concealed or misrepresented any Code Ann. § 57-3-702]
material fact or circumstance + Direct shipper’s license [Tenn. Code Ann.
concerning the operation of the § 57-3-217]
business or employment, or if the + Alcoholic beverage collector’s license
interest of the applicant in the operation + Winemaking on premises facility license
of the business or employment is not + Farm wine permit
truly stated in the application, or in case + Retail food store wine license [Tenn.
of any fraud or false swearing by the Code Ann. § 57-3-803]
applicant touching any matter relating
to the operation of the business or
8TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Alcoholic Beverage Commission
(continued)
Alcoholic Beverage Collectors
+ Winery satellite permit [Tenn. Code Ann. [Tenn. Code Ann. § 57-3-209]
§ 57-3-207(3)]
An “alcoholic beverage collector” is defined as
+ Delivery service and delivery employee
a person who collects commemorative bottles
licenses [Tenn. Code Ann. §§ 57-3-224,
containing alcoholic beverages, wine, or
225]
distilled spirits and displays the collection in a
place available to the public, either by
Liquor retailers can have no more than two
appointment or regular schedule, and who
retail licenses, except for those who hold
sells collectible alcoholic beverages for the
more than two licenses prior to April 12, 2016.
purpose of collection, without the intent that
[Tenn. Code Ann. § 57-3-406(a)]
the collectible beverage would be consumed.
No new liquor store licenses will be issued
A person qualifying as an alcoholic beverage
until July 2, 2021, except in limited specific
collector may apply to the Alcoholic Beverage
circumstances, though existing licenses may
Commission for an alcoholic beverage
be transferred to another entity. [Tenn. Code
collector’s license. The application fee for such
Ann. § 57-3-204(a)]
license is $300 and the annual license fee is
$1,000. The license allows the collector to
Any person, firm, or corporation desiring to
purchase beverages and to sell, in face-to-face
manufacture, distill, rectify, or sell wine or
transactions, collectible beverages to persons
other alcoholic beverages must apply to the
aged 21 or older. Sales prices must be at least
commission, on forms furnished by the
300% of the sales price of the same brand and
commission, for a permit to do so. No person,
quantity sold at retail.
firm, or corporation is authorized to engage in
any of these activities until the permit is
Alcoholic beverage collectors are liable for
approved and issued by the commission.
payment of all sales taxes due on such sales
There are general requirements for all
made by the collector to others. If the
licenses and specific requirements that are
collector cannot demonstrate that the
pertinent to the type of license or permit
collectible alcoholic beverage was purchased
required. For information regarding the
from a licensed retailer, the collector will also
licensing requirements, fees, and procedures,
be liable for payment of the appropriate
please contact the Alcoholic Beverage
wholesale gallonage taxes to the Department
Commission at (615) 741-1602. Any person,
of Revenue.
firm, or corporation desiring to brew or sell
beer should contact their local city or county
Wine Direct Shippers
government for applicable information. [Tenn. Code Ann. § 57-3-217]
The same entity that grants the license has Any entity holding a federal basic permit
the power to revoke the license for sufficient issued under the Federal Alcohol
cause under Tenn. Code Ann. §§ 57-3-104(c)(1) Administration Act and in the business of
and 57-5-108(a). Information relating to rules, manufacturing, bottling, or rectifying wine can
procedures, applicable state and local laws, apply to the Alcoholic Beverage Commission
and license revocation and relief procedures for a wine direct shipper’s license. A person
should also be obtained from the licensing meeting the licensing requirements and
agency at the time of application.
9TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Alcoholic Beverage Commission Any common carrier that willfully fails to make
(continued) reports is subject to a notification of violation.
receiving a direct shipper’s license can make In the case of a continuing failure to make
sales and deliveries of wine by common reports, the Department may impose a fine of
carrier to Tennessee citizens 21 years of age up to $500 for each delivery not reported to
or older. the Department. [Public Chapter 486, Acts of
2017]
Sales cannot exceed nine liters to any
individual during a calendar month or twenty- Winery Licenses
seven liters to one individual in a calendar [Tenn. Code Ann. § 57-3-207]
year.
Winery licenses may be issued to any entity
meeting the statutory requirements of Tenn.
There is a fee of $300 for the application and
Code Ann. § 57-3-207. The license holder may
an annual license fee of $150.
manufacture and bottle, but may not rectify,
alcoholic vinous beverages unless the license
Direct shippers must also remit to the
holder also holds a license to distill and/or
Department of Revenue the appropriate
rectify alcoholic spirits. Wineries located
Tennessee alcoholic beverage gallonage taxes
outside Tennessee may apply for and receive
on such sales as well as the required sales
winery licenses.
taxes resulting from such sales. Taxes will be
due not later than the 20th of the month
Applicants for winery licenses must remit a
following the month in which the sale was
fee of $300 with the license application. There
made.
is an annual license fee of $150, which must
Shipment of Wine Reporting be remitted prior to issuance of an approved
license.
Effective July 1, 2018, Tenn. Code Ann. § 57-3-
217(h) requires every common carrier that Licensed wineries may serve wine without
contracts with a direct shipper for delivery of charge as complimentary samples for tasting
wine, beer, or other alcoholic beverages into at the winery and may sell wine at retail in
this state to prepare and file with the sealed containers at the winery, but not for
Department of Revenue a monthly report of consumption in bonded areas. Wineries may
known shipments of wine, beer, and other donate wine without charge to nonprofit
alcoholic beverages, though direct shipment religious, educational, or charitable
of beverages other than wine is not organizations.
authorized. The report must contain the
name and business address of the shipper of Wineries may exchange wine in bulk with
the wine, beer or other alcoholic beverages, other wineries. Such exchange will not be
the name and address of each customer considered a sale.
receiving the wine, beer or other alcoholic
beverages, the weight of the package In addition to its own wines, licensed wineries
delivered to each customer, a unique tracking located in Tennessee may also sell on their
number, and the date of delivery. own premises items such as juices or
concentrates derived from any agricultural
products; items used in home winemaking;
10TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Alcoholic Beverage Commission
(continued)
sales of their wine products for consumption
gifts or tourism-related products; utensils and off the premises.
supplies related to the use, consumption, or
storage of wine; fruit, cheese, and other snack Nonprofit entities holding wine festivals must
foods that can be paired with wine; obtain a special occasion license from the
nonalcoholic beverages; ice; coolers; tobacco Alcoholic Beverage Commission in order to
products; clothing and accessories related to serve complimentary samples and make sales
wine or the winery; and reading materials of wine for consumption off the premises.
related to wine. Wineries located outside
Tennessee may sell such items as their state Wine Sales in Grocery Stores
laws allow. Tennessee wineries are prohibited
from selling distilled spirits, beer, and wine Any jurisdiction that has previously held and
not manufactured or bottled on the premises. passed a referendum allowing retail package
stores or the sale of alcoholic beverages for
Wineries located in Tennessee may sell no consumption on the premises may hold a
more than five cases or 60 liters of wine to a referendum to determine if sales of wine can
single retail customer in one day. Purchasers be made in a retail food store in the
of wine from out-of-state Tennessee-licensed jurisdiction.
wineries cannot legally transport into
Tennessee more than five cases or 60 liters of A “retail food store” is an establishment open
such wine in one day. Persons purchasing and to the public and that derives at least 20% of
transporting such wine must have a bill of sale its sales taxable sales from the retail sale of
that identifies the nature, quantity, purchaser, food and food ingredients for human
and date and place of purchase of the wine. consumption, as defined in Tenn. Code Ann. §
67-6-228, and has retail floor space of at least
Bills of sale for wine purchased from out-of- 1,200 square feet.
state Tennessee-licensed wineries must
reflect that the wine was purchased for Establishments wishing to sell wine must,
transport into Tennessee and that Tennessee upon approval of the referendum by the local
taxes have been paid. jurisdiction, apply to the ABC for a retail food
store wine license and pay a one-time $400
Wine Festivals nonrefundable fee with the application.
Criteria for the application process are
Any nonprofit entity organized to encourage established by the ABC.
and support grape growing and winemaking
with membership of ten or more such The annual license fee is $1,250. In order to
licensed wineries as members can hold no renew the license each year, the
more than eight wine festivals per calendar establishment must maintain at least 20% of
year. Each festival cannot exceed 72 hours in its retail sales from the sale of food and food
length. ingredients. [Tenn. Code Ann. §§ 57-3-801 -
57-3-818]
Participating wineries can transport and offer
one-ounce complimentary samples of their Manufacturers and Distillers
wines at such festivals. Server permits issued
by the Alcoholic Beverage Commission are Any manufacturer or distiller holding a
required. Participating wineries can also offer manufacturer’s/distiller’s license may serve
11TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Alcoholic Beverage Commission
(continued)
samples of the product manufactured or High Alcoholic Beer Manufacturers
distilled to any person of legal drinking age [Tenn. Code Ann. Title 57, Chapter 3]
without cost and may include such samples as
part of a tour of the manufacturer’s or A manufacturer of high alcoholic content beer
distiller’s premises. The samples may be made may manufacture such product in any
available on the premises of the retailer or at jurisdiction without a voter referendum as
any other location of the manufacturer or long as the municipality or unincorporated
distiller when the other location has been area of a county allows, as a result of a prior
reported to the Alcoholic Beverage voter referendum, both retail package sales
Commission and permitted by federal law. and consumption of alcoholic beverages on
[Tenn. Code Ann. § 57-3-202(i)(1)-(2)] the premises. [Tenn. Code Ann. § 57-2-103]
Effective May 4, 2017, distillers holding a If such manufacturer holds a retail license to
manufacturer’s/distiller’s license may sell sell alcoholic beverages, the manufacturer can
distilled spirits that are manufactured at the make retail sales of its product at a retail
distillery for consumption on the premises, location on the manufacturer’s premises. The
but not for consumption in bonded areas. manufacturer can sell no more than five
[Tenn. Code Ann. § 57-3-202(i)(4)] gallons or 1/6th barrel of beer or high alcohol
content beer, or any combination, to any one
Samples and sales of alcoholic beverages sold individual per visit to the premises.
for consumption on the premises of a
distillery are not subject to liquor-by-the-drink The manufacturer may also hold a license as a
tax. [Tenn. Code Ann. § 57-3-202(i)(5)] restaurant or limited service restaurant
located on the manufacturer’s premises and
Effective April 27, 2016, manufacturers of may sell the manufacturer’s beer or high
intoxicating beverages are authorized to use alcohol content beer at such a restaurant.
items related to or incidental to the tasting of
alcoholic beverages anywhere that tastings If the manufacturer obtains a license to sell its
are permitted. They are also authorized to product at a retail store on the manufacturer’s
rent or lease any portion of their premises for premises, the local jurisdiction shall impose a
any event, with or without charge, and are 15% inspection fee on the wholesale price of
required to obtain a special occasion license such high alcoholic content beer sold at the
in order to hold an event. Owners, officers retail store.
and employees of a manufacturer, rectifier, or
importer are considered representatives of The gallonage taxes imposed on sales of high
the manufacturer, rectifier or importer for alcoholic content beer are the same as those
purposes of requiring a permit. [Tenn Code imposed on wine in Tenn. Code Ann. § 57-3-
Ann. § 57-3-202] 302(a) or on alcoholic beverages in Tenn.
Code Ann. § 57-3-303(l), whichever is
Effective May 20, 2016, no alcoholic beverages applicable.
or wine may be sold or delivered to a retailer
unless those beverages have been stored at a
wholesaler's premises for at least 24 hours.
[Tenn. Code Ann. § 57-3-402]
12TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Alcoholic Beverage Commission
(continued)
Privilege Tax on Manufacturers
[Tenn. Code Ann. § 57-2-102]
Before any person engages in the
manufacture of intoxicating beverages or high
alcohol content beer, the person must pay a
privilege tax of $1,000 to the county in which
the manufacturing facility is located and a
privilege tax of $1,000 to the Tennessee
Department of Revenue. The Department of
Revenue and the county must issue a license
authorizing the operation of the
manufacturing business.
If the manufacturing business will also be
located in a municipality in Tennessee, the
manufacturer must also pay a privilege tax of
$1,000.00 to the municipality. The
municipality will issue a license authorizing
the manufacturing plant to operate.
13TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Sales of Alcohol for Consumption on the
Premises (Liquor by the Drink)
[Tenn. Code Ann. § 57-4-101]
should read the cited Tennessee code section
Under state law, it is legal for certain or call the Alcoholic Beverage Commission.
taxpayers to sell alcoholic beverages, wine,
and beer for consumption on the premises. Local Referendum Required
These taxpayers, as defined in Tenn. Code
Ann. § 57-4-102, include: Although these taxpayers are qualified to sell
liquor by the drink under state law, none may
+ Hotels and motels engage in sales of alcoholic beverages and
+ Commercial passenger boat companies. wine for consumption on the premises in any
+ Restaurants county or municipality that has not approved
+ Commercial airlines these sales by a popular referendum in that
+ Passenger trains county or municipality. Approval of these
+ Charitable, nonprofit, or political sales by referendum must be certified to the
organizations Alcoholic Beverage Commission by the county
+ Tourist resorts or clubs election commission. If a county referendum
+ Convention centers has approved sales of alcoholic beverages,
+ Historic performing arts centers wine, or beer for consumption off the
+ Urban park centers premises, then any municipality within that
+ Historic interpretive centers county may conduct a referendum to
+ Community theaters authorize sales for consumption on the
+ Historic mansion houses premises within the boundaries of that
+ Terminal buildings of commercial air municipality.
carriers
+ Zoological institutions Application Procedure
+ Museums
If sales for consumption on the premises, also
+ Commercial airline travel clubs
referred to as liquor by the drink, have been
+ Public aquariums or aquarium exhibition
approved in the county or municipality, then
facilities
qualified entities may apply to the Alcoholic
+ Caterers
Beverage Commission, according to the
+ Sports authority facilities
commission’s requirements, for a permit to
+ Clubs
sell wine and spirits. (They must apply to the
+ Bed and breakfast establishments
local authorities for approval to sell beer.)
+ Motor speedways
Restaurants may apply to sell wine only,
+ Theaters
under the provisions of Tenn. Code Ann. § 57-
+ Paddlewheel steamboat companies
4-101(c)(1). After receipt and proper
+ Special historic district (wine only)
investigation of the application, the Alcoholic
+ Other facilities as specified
Beverage Commission will decide whether or
+ For-profit festival operators
not a permit will be issued. For complete
licensing requirements and rules, call the
These taxpayers are very specifically defined
Alcoholic Beverage Commission.
in Tenn. Code Ann. § 57-4-102. Any taxpayers
with questions as to whether or not they
qualify as one of the entities listed above
14TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Sales of Alcohol for Consumption on the
Premises (Liquor by the Drink) (continued)
Bond Requirement consumption on the premises is exercising a
[Tennessee Alcoholic Beverage Rule 1320-04- taxable privilege. The state legislature has
02-.02] established the following state taxes, to be
paid annually to the Alcoholic Beverage
Each person seeking a license to make sales
Commission:
for consumption on the premises must, as a
condition prior to the granting of the license,
Entity Tax July 1, 2004 Previously
post security with the Commissioner of
Private Club $ 500 $ 300
Revenue. This security may be in the form of a
Convention Center $1000 $ 500
corporate surety indemnity bond, a cash
Premier Type Tourist
deposit, or a bond secured by a certificate of
Resort $2000 $1500
deposit. This security will be posted to insure
Historic Performing Arts
proper payment of all taxes incurred for
Center $ 150 $ 300
which the applicant may become liable.
Urban Park Center $ 150 $ 500
Commercial Passenger Boat
For all licensees, other than restaurants
Company $1250 $ 750
selling only wine, the amount of the initial
Historic Mansion House
security will be $10,000. For restaurants
Site $ 150 $ 300
selling only wine, the amount of the initial
Historic Interpretive
security will be $2,000. After the first three
Center $ 150 $ 300
months of operations and timely submission
Community Theater $ 150 $ 300
of all required reports and returns, the
Zoological Institution $ 150 $ 300
licensee can submit a written request to have
Museum $ 150 $ 300
the security adjusted to four times the
Commercial air carrier terminal
average monthly tax liability of the first three
building facility $1500 $1000
months. The security amount cannot be
Commercial Airline Travel
adjusted to less than $1,000.
Club $1000 $ 500
Public Aquarium $ 150 $ 300
After the first three months of doing business,
Motor Speedway $2000 $1000
the Commissioner may also determine that
Sports Facility $2000 $1000
the security should be adjusted to four times
Theater $ 150 $ 300
the average monthly tax liability. If required,
additional security must then be posted to
7/06 7/05 7/04 7/03
cover the amount required. Failure to post
Restaurant
security as determined by the Commissioner,
75-125 Seats $ 750 $ 700 $ 650 $ 600
or forfeiture or cancellation of any portion of
126-175 Seats $ 925 $ 850 $ 800 $ 750
the security posted, will cause any application
176-225 Seats $ 975 $ 900 $ 850 $ 800
for license or renewal of license to be
226-275 Seats $1100 $1025 $ 950 $ 900
disapproved.
276 Seats + $1200 $1125 $1050 $1000
Taxes and Fees
[Tenn. Code Ann. § 57-4-301] Restaurant (wine only)
40-74 Seats $ 650
Any person engaging in the retail sales of 75-125 Seats $ 270 $ 220 $ 170 $ 120
alcoholic beverages, wine, or beer for 126-175 Seats $ 300 $ 250 $ 200 $ 150
15TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Sales of Alcohol for Consumption on the
Premises (Liquor by the Drink) (continued)
obtained in this computation by $1.21 per
176-225 Seat $ 310 $ 260 $ 210 $ 180 gallon of wine and $4.40 per gallon of spirits
226-275 Seats $ 330 $ 280 $ 230 $ 180 apportioned to Tennessee.
276 Seats + $ 350 $ 300 $ 250 $ 200
Art Galleries
Hotel or Motel
0-99 rooms $1000 $1000 $1000 $1000 Art galleries that do not sell food or beverages
100-399 rooms $1250 $1200 $1000 $1000 and that receive 90% of their revenue from
400 rooms + $1500 $1400 $1200 $1000 the sale of artwork may serve wine to patrons
without a charge. These art galleries are not
Special Historic District (Wine Only) $ 100 required to pay a license fee or taxes related
[Tenn. Code Ann. § 57-4-301(g)] to the privilege of serving wine. [Tenn. Code
Ann. § 57-4-105]
Each county or municipality where one of
Wine Sales at Satellite Locations
these entities exercises its privilege may also
[Tenn. Code Ann. § 57-3-207]
levy and collect the privilege tax separately.
However, the privilege tax collected by the Any winery or any farm wine producer
county or municipality is based upon 2003 licensed by the ABC may conduct business at
rates. any two satellite facilities in any jurisdiction
where it is lawful to manufacture intoxicating
Tax on Gross Sales
liquors or intoxicating drinks pursuant to
In addition to these taxes, a 15% Tennessee Tenn. Code Ann. §§ 57-2-103(c) and (d). At its
tax is also levied on these establishments on satellite facilities, the winery may conduct any
the gross sales of all alcoholic beverages and business that is authorized at the licensed
wine for consumption on the premises. winery, except for the manufacturing and
bottling of wine. At its satellite facilities, a farm
Commercial Airlines, Paddlewheel wine producer may conduct any business that
Steamboats, and Passenger Trains is authorized at the premises of the farm wine
producer.
In lieu of the taxes listed above, commercial
airlines, paddlewheel steamboats, and Any licensed winery or any farm wine
passenger trains will pay an annual licensing producer shall obtain a satellite permit for
fee of $1250. In addition, these entities must each satellite facility utilized by the winery or
pay Tennessee tax on alcoholic beverages farm wine producer from the ABC in order to:
brought into this state on which Tennessee
tax has not been paid. Their tax liability is + Serve samples with or without charge;
determined by a two-fold apportionment + Sell wine for consumption on or off
computation. First, the entity must multiply the permitted premises; and
the quantity of each type of alcoholic + Sell any other products under
beverage purchased within its operating subsections (h) and (o).
system by the ratio of its revenue passenger
miles in Tennessee to the total revenue Additionally, up to three wineries that
passenger miles within its system. Next, the annually produce no more than 50,000
entity must multiply the respective results gallons of wine each or three farm wine
16TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Sales of Alcohol for Consumption on the
Premises (Liquor by the Drink) (continued)
produces, or any combination thereof, may service restaurant that is owned by the same
obtain a satellite permit to conduct business person.
at one satellite facility.
Notwithstanding any law, rule, or regulation
A satellite permit issued to a winery or farm to the contrary, any licensed winery or farm
wine producer shall only be available upon wine producer may serve wine manufactured
the payment of a one-time application fee to by the winery or the farm wine producer for
the ABC of $300 per satellite location and consumption on the premises of the winery or
upon the payment of an annual license fee to farm wine producer.
the ABC of $150.
Effective May 1, 2016, licensed wineries and
Any licensed winery or farm wine producer farm wine producers may label and advertise
that has obtained a satellite permit and elects wine made from apples as cider, apple cider,
to charge consumers for samples may only or hard cider. [Tenn. Code Ann. § 57-3-207]
sell such samples that are manufactured by
the winery or farm wine producer. Any wine Effective May 24, 2015, except as provided
provided at the satellite facility for sales, below, any sale of wine authorized for
whether for tastings, for consumption on the consumption on the premises at the winery or
premises, and for consumption off the on the premises of the farm wine producer
premises, shall be obtained from a wholesaler shall be subject to taxation under Tenn. Code
licensed pursuant to Tenn. Code Ann. § 57-3- Ann. § 57-4-301(c) in addition to any sales tax
203. which is due. The taxes shall be paid and
collected in the manner prescribed by Tenn.
A wholesaler of the winery or farm wine Code Ann. § 57-4-301 and the appropriate
producer's products may permit a winery or rules of the Department of Revenue.
farm wine producer to deliver for sale
products which are sold on the premises of However, samples of wine for tasting on the
the winery, the farm wine producer, or the premises, with or without charge, or sales of
satellite facility; provided, that the wholesaler wine at retail in sealed containers for
permitting such direct shipment shall include consumption on the premises, but not for
the amounts delivered in its inventory, report consumption in the bonded areas are not
depletions for purposes of tax collection, and subject to liquor-by-the-drink tax. [Tenn. Code
be responsible for the payment of taxes of Ann § 57-3-207(t)]
such depletions.
Self-Distribution Permits for Farm Wine
Any licensed winery or farm wine producer Permit Holders
may qualify for and hold a license as a
Effective July 1, 2016, farm wine permit
restaurant or limited service restaurant;
holders are authorized to self-distribute their
provided, that notwithstanding restrictions or
product with the following restrictions:
prohibitions on such licensees, a restaurant or
limited service restaurant may sell for off-
+ Total annual wine production by permit
premises consumption, wine manufactured
holders must not exceed 50,000 gallons;
pursuant to this section at such location or at
+ The farm wine permit holder must not
any other licensed restaurant or limited
have a distribution contract with a
17TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Sales of Alcohol for Consumption on the
Premises (Liquor by the Drink) (continued)
wholesaler that includes distribution assistance of an agent of the
rights for a county that is located within Department to observe the loss and
100 miles of the licensed winery where furnish a certificate of loss. The
the wine being distributed has been certificate must state the quantity and
manufactured, produced or bottled; brand of liquor on which the federal
+ The permit holder may distribute no strip stamp remains intact, and the
more than 3,000 cases of wine on the quantity and brand of wine, on which
winery’s premises to any licensee holder the crown, cap, seal, or cork remain
located within 100 mile of the winery's intact and unbroken.
premises; and + In instances when the container is
+ The farm wine permit holder is unbroken but the contents are
responsible for all taxes and records considered unsalable by the U.S. Food
imposed. and Drug Administration or other
appropriate authority, the licensee can
Restrictions on the Disposition of Alcoholic be allowed the inventory reduction if the
Beverages [Tennessee Alcoholic Beverage contents are destroyed by or in the
Rule 1320-04-02-.04] presence of a Department agent and so
certified. A copy of either certification
No licensee may make any disposition of must be retained for three years as
liquor or wine other than through sales for documentation of the reduction.
consumption on the premises.
Wine or Spirits Used in Food Preparation
+ A license holder may also suffer a loss of
inventory through theft, breakage, or Wine or distilled spirits to be used in the
acts of nature. If this happens, the preparation of food must be stored
licensee can be permitted to reduce separately from those sold by the drink for
inventory by the amount of beverage consumption on the premises. They must be
lost by supplying proper proof of the used exclusively in the preparation of food. If
loss to the Department, and thereby any portion of the contents of a bottle is sold
eliminate the tax liability for the lost by the drink for consumption on the
beverages. premises, the entire contents of the bottle will
+ Theft: As soon as feasible after the theft, be taxed.
provide the Department with proof that
the theft was reported to the proper law Reports to the Commissioner
enforcement agency and that the [Tennessee Alcoholic Beverage Rule 1320-04-
02-.05]
insurer of the goods has paid for the
loss. Upon receipt of the proof, the
Each applicant will provide the Commissioner
Department will issue the licensee a
of Revenue, on prescribed forms, price
certificate, a copy of which must be
schedules of all alcoholic beverages offered
retained in the licensee’s records for
for sale, and show the regular sales price of
three years as authorization for the
each drink listed, including the applicable
inventory reduction.
sales tax and alcohol beverage tax. When
+ Breakage or acts of nature: As soon as
drinks are sold at other than the regular sales
feasible after the loss occurs, obtain the
price, as during happy hour, the schedule
18TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Sales of Alcohol for Consumption on the
Premises (Liquor by the Drink) (continued)
shall reflect the event or activity, the number The Commissioner may, at the written
of hours per day and days per week, and the request of the licensee, authorize a taxpayer
special price at which the drinks are sold. to file on an accounting period other than
monthly. In this case, the licensee will file the
These schedules must be filed at the time the return on or before the 15th day of the month
first return is filed and must be updated at following the end of the reporting period. All
least annually, but may also be updated when other reporting requirements remain the
any significant change is made in the same.
information contained on the schedule.
Extension
Inclusion of Liquor-by-the-Drink Tax in
Menu Price The Commissioner may, for good cause, grant
an extension of time, not to exceed 30 days,
Effective May 9, 2017, Tenn. Code Ann. § 57-4- for a licensee to file the return and pay the tax
301 allows a business owner to either include due. Requests for extension must be made in
the tax on the sale of alcoholic beverages on writing, state why the extension is needed, be
the premises in the menu price of the signed by the licensee, and be made prior to
alcoholic beverage, or to include the tax on the due date of the tax return and tax. [Tenn.
the final bill to the customer. If tax is not Code Ann. § 57-4-304(a)]
included in the menu price, notice must be
Failure to File Timely Returns
provided on the menu that a 15 percent tax
on the sale of alcoholic beverages will be When any taxpayer fails to file a timely return
added to the final bill. or is delinquent in payment of tax for the
third time in any one-year licensing period,
Returns and Payment
the Commissioner may recommend to the
[Tenn. Code Ann. § 57-4-302]
Alcoholic Beverage Commission that the
The Commissioner of Revenue is the license of that taxpayer be revoked or
collecting authority for the state taxes listed suspended. It is a misdemeanor for any
here, and may promulgate rules and licensee to continue in business after
regulations to implement full collection. The revocation or suspension of the license. Each
tax will be collected from the consumer and day in business constitutes a separate
will be remitted by the retailer. violation. [Tenn. Code Ann. § 57-4-304(b)]
The tax is due monthly, on the first day of the If a licensee becomes delinquent in the
following month. On or before the 15th day of payment of the tax, the commissioner may
each month, each licensee will file an notify, by registered mail, any person,
electronic return with the Department of including the Alcoholic Beverage Commission,
Revenue showing the gross sales of all sales having in their possession or control any
taxable under this tax during the preceding credits or other personal property belonging
month. A separate return must be filed for to the delinquent licensee, or owing any debts
each established place of business. The to the licensee at the time of the delinquency.
amount of tax due will be remitted at the No one so notified may make any disposition
same time. Failure to remit the tax by this of those debts or properties without the
date will cause it to be delinquent.
19TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Sales of Alcohol for Consumption on the
Premises (Liquor by the Drink) (continued)
approval of the Commissioner, or until 30 prices, as posted with the
days elapse from the receipt of the notice. Department, on the price schedule
Any person receiving such notice must advise (happy hour sales, etc.) must be
the Alcoholic Beverage Commission of such clearly recorded on cash register
property, credits, or debts within five days. receipt tapes and/or guest checks
[Tenn. Code Ann. § 57-4-305] showing the total sales during a
particular period or activity. Summary
Records totals and/or grand totals of such
[Tennessee Alcoholic Beverage Rule 1320-04- tapes will not be accepted unless
02-.06] supported by the itemized tape used
to arrive at the total.
Every person licensed for sales for
+ A record of all alcoholic beverages
consumption on the premises is required to
purchased including all invoices,
properly report and pay the applicable tax on
delivery tickets, bills of lading, and
sales. To do so, records must be maintained
copies of purchase orders. The
that will provide a daily record of sales clearly
purchase dates will be considered to
distinguishing between regular sales and
be the invoice dates.
happy hour or special price sales, and all
+ A perpetual inventory record of all
purchases of alcoholic beverages
alcohol or wine used in cooking.
distinguishing between alcoholic beverages
Cooking alcohol and wine must be
used in cooking and for drinks. These records
stored separately from alcoholic
must be maintained for four years and must
beverages, used exclusively for
include:
cooking purposes, and accounted for
as a food item.
+ A monthly inventory by brand of the
value of alcoholic beverages on hand
Transfer of Business Ownership
as of the last day of each month. [Tennessee Alcoholic Beverage Rule 1320-04-
+ A daily record of all sales. Entries for 02-.08]
sales of alcoholic beverages must not
be commingled with sales of food, Any person who purchases or obtains
beer, or other items. Entries on ownership of a business engaged in making
documents evidencing sales of sales of alcoholic beverages for consumption
alcoholic beverages should be made on the premises will not make any sales of
either on a separate document or on alcoholic beverages prior to receiving a
the bottom or reverse of any license from the Alcoholic Beverage
document showing sales of other Commission and registering for sales and
items. If cash registers are used, tapes alcoholic beverage taxes with the Department
must be keyed separately for sales of of Revenue. Any person making sales before
alcoholic beverages and sales of beer, accomplishing these actions will be held liable
food, or other items. for the tax on those sales, and will be
+ Summary totals will not be accepted operating illegally under state law.
unless supported by the itemized tape
used to arrive at such totals. Receipts Any person who sells, transfers, or otherwise
derived from the sales of alcoholic terminates ownership in a business engaged
beverages sold at other than regular
20TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Sales of Alcohol for Consumption on the
Premises (Liquor by the Drink) (continued)
in sales of alcoholic beverages for
consumption on the premises must provide
notice of the sale, transfer, or termination to
the Department of Revenue within 15 days of
the effective date of the sale, transfer, or
termination. “Notice” means direct written
notice to the Department as part of the final
alcoholic beverage return and final sales tax
return of the business. The business’s
alcoholic beverage license must also be
surrendered to the Alcoholic Beverage
Commission. [Tenn. Code Ann. § 57-4-303]
Any person who, upon sale or transfer of the
business, allows or permits the new owner or
operator to remit tax, make wholesale
purchases, or conduct business in any
manner using the seller’s or transferor’s
alcoholic beverage license or tax registration
will be jointly and severally liable with the new
owner or operator for any unpaid taxes
accrued during the period of illegal operation.
Any person that fails to provide the required
notice to the Department of Revenue, with the
result that the new owner continues to
operate under the seller’s or transferor’s
alcoholic beverage license, will be presumed
to have allowed the illegal operation to occur.
21TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Mixing Bar Tax not later than the 20th day of the month
[Tenn. Code Ann. § 67-4-410] following any month in which the taxpayer
has gross receipts from any sales of mixed
Any person selling setups for mixed drinks in drinks or setups.
any location is liable for a gross receipts
privilege tax on sales of those items. The tax Records
rate is 15% of gross sales.
Persons making sales and remitting the tax
The term “setups for mixed drinks” includes will maintain pertinent records, as required by
sales of water, soft drinks, ice, or any item state law, for audit review; these records will
capable of being used to prepare a mixed include records of all purchases and gross
drink at a place of business. It also includes receipts from the sales of bottled beverages
the sales of setups for mixed drinks to be and setups.
consumed by persons supplying alcoholic
beverages from their own container (for
example: bring-your-own-bottle) on the
premises of any business holding a license to
dispense alcoholic beverages for consumption
on the premises.
This tax is applicable to any sales of setups, as
defined above, regardless whether the drinks
made with the setups are consumed on the
premises of the business or off the premises.
It applies to any country club; nightclub;
private clubs such as social, dinner, athletic, or
sporting clubs; and fraternal societies, orders,
or associations making sales of these items.
Exceptions
This tax does not apply to sales of mixed
drinks taxed under Tenn. Code Ann. § 57-4-
301 (liquor-by-the-drink tax) and sales by
liquor wholesalers licensed under Tenn. Code
Ann. § 57-3-203. It also does not apply to sales
of setups made by cafes, cafeterias, or
restaurants where the sales of setups are
incidental to their primary business, selling
prepared meals, and where no bar or
separate facility is maintained for the purpose
of selling mixed drinks or setups.
Returns and Payment
The mixing bar tax is due monthly and must
be remitted to the Department of Revenue
22TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Brand Registration
[Tenn. Code Ann. § 57-3-301]
different brands of sparkling grape
“Brand” Defined wine.
+ The major category brands of distilled
Each and every distilled spirits or wine
spirits are neutral spirits or alcohol,
product bearing a distinct “brand name” or
whiskey, gin, brandy, blended applejack,
“trade name”, as those terms are defined and
rum, tequila, cordials and liqueurs,
used in the regulations put into effect by the
flavored distilled spirits, imitations,
Alcohol and Tobacco Tax and Trade Bureau of
geographical designations, and products
the US Department of Treasury, concerning
without geographical designations but
labeling of wines and distilled spirits, are
distinctive of a particular place. Further,
considered a separate brand for tax purposes
brands of whiskey are bourbon whiskey,
in Tennessee.
whiskey distilled from bourbon, light
whiskey, blended whiskey, blended
Within the group of wine or distilled spirits
straight whiskey, spirit whiskey, scotch
products bottled, manufactured, distilled,
whiskey, Irish whiskey, and Canadian
rectified, imported, or marketed under a
whiskey.
particular “brand name” or “trade name” as
previously defined, products that fall within The Measure of the Tax
separate classes or types, as defined in the [Tenn. Code Ann. § 57-3-301(b)]
standards of identity for the several classes
and types of wine and distilled spirits put into Every manufacturer or importer distributing
effect by the ATF, will also be considered brands of alcoholic beverages in Tennessee
separate brands for Tennessee tax purposes. must properly register each brand distributed
Wine or distilled spirit products that differ by them and pay the proper amount of brand
only in the amount of alcohol they contain registration privilege tax to the Department of
shall not be considered as separate brands. Revenue. The privilege tax year is from June
1 through May 31 each year. All documents
“Brand” is also defined as the name, must be filed, and the tax paid, by May 1 each
trademark, or trade name of the product, as year; the tax is delinquent after May 31.
indicated on the certificate of label approval
as registered with the alcohol and tobacco tax The tax is based on the number of cases of
and trade bureau of the United States each brand sold during the previous 12-
Department of Treasury, or, if no certificate of month period. If a particular brand was not
label approval is required, then the name, sold for the entire 12-month period, the tax
trademark, or trade name of the product. will be based on the average monthly sales of
[Tenn. Code Ann. § 67-5-301(a)] that brand times 12. Tax is due in the
following amounts:
Examples are given below. This is not an all-
inclusive listing of the many brands defined + For each brand of distilled spirits for
under the law. which actual wholesale sales were 50
cases or more - $250 per year.
+ Grape wine, sparkling grape wine, and + For each brand of distilled spirits for
carbonated grape wine are considered which actual wholesale sales were less
separate brands of grape wine. Further, than 50 cases - $100 per year.
champagne, champagne style, and
crackling wine are all considered
23TENNESSEE TAXES ON ALCOHOLIC BEVERAGES AND BEER
Brand Registration (continued)
notify the Alcoholic Beverage Commission
+ For each brand of wine for which actual that the person’s permit should be suspended
wholesale sales were 250 cases or more pending proper registration. If proper
- is $250 per year. registration does not ensue within 30 days,
+ For each brand of wine for which actual any unregistered or improperly registered
wholesale sales were less than 250 beverages will be seized and sold by the
cases - no tax is due. Department.
Introduction of a New Brand In addition to paying the applicable tax each
[Tenn. Code Ann. § 57-3-301(e)] year, each manufacturer or distributor will
file, with the Department, copies of all written
No manufacturer, importer, or representative
contract or renewal agreements with
can introduce any brand of alcoholic beverage
Tennessee wholesalers making sales of their
into Tennessee until the tax has been paid to
brands in this state, copies of the labels of
the Department of Revenue. Likewise, no
each brand of alcoholic beverages distributed
wholesaler can give an order for, receive,
in this state, copies of the approved ATF Form
accept, or offer for sale any brand of alcohol
1649, and any other reports or forms required
beverages until the brand has been registered
by the Commissioner of Revenue. Copies of
and the annual tax paid to the Department.
labels and forms need not be filed every year,
but must be filed initially and when any label
Any manufacturer or importer that wishes to
change or filing addition is made.
introduce a new brand of alcoholic beverage
in Tennessee, one that has not been Transfer of Brands
distributed previously in this state, will first [Tennessee Alcoholic Beverage Rule 1320-04-
register the brand and pay the tax of $250 per 06-.07]
brand being registered (there is no tax on
wine upon initial registration). The $250 tax No manufacturer or importer will be
payment will be prorated on the basis of 1/12 permitted to transfer a brand from one
of the tax for each month remaining in the wholesale distributor to another or terminate
privilege tax year in which the brand is a contract without written permission of the
registered. Any manufacturer or importer Commissioner. Request for approval of
paying a prorated amount upon initial transfer or termination must be submitted in
registration will pay, for the first subsequent writing with a copy submitted simultaneously
full privilege tax year, an amount based on to the wholesale distributor in whose name
the average monthly number of cases sold at the brand is currently registered.
wholesale in Tennessee during the initial
partial year multiplied by 12. Upon receipt of the request to terminate, the
Department will notify both the requesting
Failure to Register a New Brand party and the wholesale distributor that they
[Tennessee Alcoholic Beverage Rule 1320-04- have 30 days to resolve any deficiency. There
06-.07] will be no change in the brand during those
30 days. If, at the end of the 30-day period,
If a manufacturer or distributor fails to the requesting party wishes to continue, it
register or improperly registers a new brand, must notify the Department in writing of that
the Department will notify that person to intention. If a request to proceed is received,
cease distribution in Tennessee until proper the Commissioner will make a determination
registration is made. The Department will also
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