When wine is pulled from inventory and used for wine pours/tastings and a tasting fee is charged, this is considered a retail sale. The tasters are considered the consumers and the tasting fees are considered to be the sale amount/payment received for the wine.
- Sales tax included in tasting fee: Generally, sales tax is required to be separately stated. However, wineries that charge a tasting fee may advertise the posted tasting fee as including sales tax. The words "tax included" should be stated immediately following the advertised price in print size at least half as large as the advertised price print size, unless the advertised price is one in a listed series. WAC 458-20-107
You will report gross sales for retailing B&O tax and retail sales tax on the excise tax return based on the total tasting fees collected with the appropriate sales tax amount “backed out.”
- Backing out the sales tax amount: The total amount received from wine tasting fees at a winery is $300. The applicable sales tax rate for the winery location is 7.9 percent. The gross taxable amount subject to sales tax and retailing B&O tax is $278.04 ($300/1.079 = $278.04).
When wine is pulled from inventory and used for wine pours/tastings and there is no tasting fee charged, the winery owes use tax based on the retail value of that particular bottle of wine. The retail value is based on the retail selling price of a like bottle of wine. The winery is considered the consumer of the wine in such cases, since it is using wine to promote its product.
So, depending on whether or not you charge tasting fees, you will either report retail sales tax and retailing B&O tax or use tax (calculated on the retail selling price of the bottle).
This could lead to a different basis for tax reporting on the same bottle of wine.
- Example: If you pull a bottle of estate wine (retail value $70) from inventory that is used for tastings in your tasting room (no charge), use tax will be calculated on the $70 retail value. If, however, you provide tastings from this bottle for $2 a taste and the bottle yields 25 tastes, sales tax will be backed out of a $50 amount.