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Tax on sleeping barrels


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#1 Curtis McMillan

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Posted 30 March 2011 - 09:26 AM

OK i understand that 40% of our final price is tax, but thats not a ruff number. I'm just looking for what you pay on a 55 gallon barrel (each week, each month) this number will help me with the project i'm working on.

#2 scohar

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Posted 30 March 2011 - 09:45 AM

Federally, you pay nothing on product in bond until it leaves bond. I don't know what your state rules are.

#3 Spirit of Texas Brad

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Posted 30 March 2011 - 11:05 AM

As stated above, you never pay taxes on the barrels until product leaves bond. But you must increase your bond to cover increased tax liablilty if you have a large amount of storage.

#4 J'ESP

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Posted 30 March 2011 - 12:48 PM

40% is a very rough number since we all get a different retail price and the taxes vary wildly depending on our state. In Canada we pay $44.27 per gallon (absolute) into bond as the spirit leaves the still. A minimum bond of $5000 is required and must be increased BEFORE spirits on hand exceed that tax value. The bond is paid to the same government agency as the tax, so I see no need to distinguish between tax paid and bond, just a different column on your spreadsheet. Both are cash paid to gov.

#5 delaware_phoenix

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Posted 30 March 2011 - 06:18 PM

Your TTB bond will need to cover spirits in storage, spirits in transit to your facility, and production. The tax rate is the same for withdrawal and operations, but you still have to have it covered. It's $13.50 per proof gallon.

So twenty 53 gallon barrels (which really hold 50 gallons) means 20 x 53 x 13.50 = $14,310 of operations bond coverage, just for the warehouse.

#6 Beauport Bob

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Posted 31 March 2011 - 09:37 AM

Question your source for what you stated about 40% of sale price. Your tax is not based on sales price. It is in Alcohol content. 40% may be what happens to be for a particular product on the shelf.
Fed excise tax $13.50 /Proof Gallon, Commonwealth of Massachusetts tax $4.05 / Proof Gallon. That is a fixed cost for your product. Again, discussed in Proof Gallons, not per bottle. Factored to be $2.14 +$0.64 respectivly = $2.78 per 750ml bottle. Does that mean at 40% of sales price you would anticipate your product to sell wholesale for $6.95 per 750ml?

#7 Curtis McMillan

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Posted 03 April 2011 - 06:53 PM

Question your source for what you stated about 40% of sale price. Your tax is not based on sales price. It is in Alcohol content. 40% may be what happens to be for a particular product on the shelf.
Fed excise tax $13.50 /Proof Gallon, Commonwealth of Massachusetts tax $4.05 / Proof Gallon. That is a fixed cost for your product. Again, discussed in Proof Gallons, not per bottle. Factored to be $2.14 +$0.64 respectivly = $2.78 per 750ml bottle. Does that mean at 40% of sales price you would anticipate your product to sell wholesale for $6.95 per 750ml?

Someone just told me to assume 40% of my final gross would be tax. Thanks for more stable numbers.




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