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Excise tax on samples

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is the fed $13.50 excise tax applicable on samples and tastings?

I'll be using 50ml or 100ml bottles as samples with resturants and bars. these will not be sales. Is the Fed excise tax applicable to theses types of transactions ?

Dick G

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Yes, it is applicable to ANY product that leaves the bonded premises, including free samples given out to bars, tasting rooms, and restaurants. Your local liquor taxes will also most likely be applicable.

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Yes, it is applicable to ANY product that leaves the bonded premises, including free samples given out to bars, tasting rooms, and restaurants. Your local liquor taxes will also most likely be applicable.

Not exactly. While samples and tastings are taxable withdrawals, there are some exceptions.

If the TTB requests a sample, no tax is due. Also, you are allowed to supply 1 liter, tax free, to a dealer, in order to secure a contract. Read the exact wording in 27 CFR as there are some additional conditions to be aware of.

Also, withdrawals for export are not taxable.

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Ah, you are right, Jedd. I was told about a year back by an ex-TTB compliance officer that any product leaving the bonded premises and not going directly to the TTB was subject to the excise tax but he was wrong apparently.

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Jedd,,, thanks for the reply. What section of 27 CFR can I find the explanation of exceptions etc.?

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I'm jumping in late, but can't let this go by. Be very careful how you read the regulations. Are one liter commercial samples permited under certain circumstances? Yes, but ....

We must visit 19.434. Do that - Google 19.434 and read the entire section, a well as those around it, to understand the tax rules on sampling. Here is an excerpt that iis pertinent to the question of furnishing samples to customers.

(B) Customer samples. If a bona fide purchase agreement exists that is contingent upon quality approval, a proprietor may furnish to a prospective customer a sample of spirits not exceeding 1 liter for quality testing.

Note that this requires a preexisting bona fide purchase agreement where the acceptance of the order is contingent on quality approval. It is not a sample you provide for the purpose of secure a buy-sell agreement. Furnish this sort of sample is furnished to confirm that the goods conform to the existing contract.

In that same paragraph - "A proprietor may furnish a sample not to exceed 1 liter to a prospective customer for quality testing in anticipation of a purchase agreement if the customer is authorized to receive bulk spirits

for industrial use.

As a craft distiller, you are not creating bulk spirits for industrial use. The language is specific - since it does not include bulk samples for non-industrial (beverage) use, the provision does not apply to your operations.

Here is a confession. I started to answer this question and had it wrong. I had to correct myself. How did I get it straight? I looked at the regulations. I've got far more experience than most, but I look. It is habit. It is sound practice. Don't trust answers that do not cite the chapter and verse. Even from someone who claims my experience. Make me tell you where to find the information and then confirm it for yourself. That is important. What is the saying, "Trust but verify." It applies here. It will save you grief.

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A "potential" customer walks into a tasting room, and says " I would like to taste your vodka". The distillery personal says, " great, here's a wooden token for one dollar, which also gives you the right to buy my bottle of vodka for a dollar off, should it prove to be as advertised, and to your liking. " The "potential customer" then forks over their dollar, and becomes a "customer" with an implied purchase agreement to purchase, should the sample be satisfactory".

This would be totally unlike a liquor store where an individual would go into an establishment and choose between 1000 different products and brands. The distillery tasting rooms are destinations where an individual has already gone out of their way to track down and locate a product they have heard about, via any number of ways, and goes in with the intent to purchase.

Or would the TTB assume that people are going to drive around the countryside burning gas to drink $1.00 worth of alcohol ? "Woohoo honey, let's jump in the SUV, burn some fuel and go do a 15 second test of 1/4 oz of alcohol in the next county".

The individuals who pay for tastings are entering into an agreement which they may or may not choose to finalize. I could see an argument that perhaps an individual who did not end up purchasing a bottle would perhaps generate an "excise tax", but for the individuals who actually bought, it would seem that they had surely met all standards of the legal criteria ?

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