As described in more detail by our colleagues, “New Jersey Tax Amnesty – A Timely Gift from the State of NJ,” this holiday season, the New Jersey Division of Taxation is affording New Jersey businesses the chance to pay back certain taxes with no penalty and only one-half of the interest.
This is a great opportunity for businesses in the alcoholic beverage industry, which is responsible for collecting a number of different taxes. The most common is Sales Tax for bars and restaurants (6.875% for 2017 and 6.625% for 2018). Similarly, craft brewers and craft distilleries must collect Sales Tax on products sold at retail for both on and off-site consumption. Craft brewers, wineries, and craft distilleries, as manufacturers of alcohol, are also responsible for paying New Jersey’s Alcoholic Beverage Tax (beer – $0.12/gallon; wine – $0.88/gallon; and liquor – $5.50/gallon), which accounted for more than $22,000,000 in revenue in July and August of 2018 alone.
Operating in a highly taxed and regulated space, businesses in the alcoholic beverage industry are not strangers to Sales Tax audits (among others, such as federal Tax and Trade Bureau and Department of Labor audits). And as New Jersey liquor licensees know, annual tax clearance is required to renew their licenses (tax clearance is also required when transferring a license).
Paying no penalty at all and only one-half the interest can mean significant savings. Perhaps that savings can be put back into the business (e.g., a new point of sale system for a restaurant or the canning line your brewery has had its eye on). Now is also the time to act, as those who do not take care of their back taxes during the amnesty period will be subject to a nonwaivable 5% amnesty penalty.
For information regarding national and state liquor law matters or general manufacturing and distribution advice, please contact our Liquor Law, Licensing, Manufacturing, and Distribution Practice Group: Liquor Law Department Chair Theodore J. Zeller III, Esquire (firstname.lastname@example.org); David C. Berger, Esquire (email@example.com) for Pennsylvania and New Jersey retail and manufacturing licensing; or contact our offices at 610-391-1800.