Gratuities received voluntarily are exempt from retail sales tax and Retailing B&O tax. However, when a business adds the gratuity amount to the check, bill, receipt, etc., retail sales tax and Retailing B&O tax apply. When the gratuity is not clearly voluntary, it becomes part of the selling price subject to tax.
Reseller permits are free and will be issued to businesses that make wholesale purchases. The permits allow businesses to purchase items or services for resale without paying retail sales tax. Examples of items a winery might purchase for resale include, but are not limited to:
Washington offers over 50 tax incentive programs to eligible businesses. These incentives are to encourage the creation and preservation of family-wage jobs, especially in areas with high unemployment. Programs that may apply to businesses in the wine industry include, but are not limited to:
Litter tax is due on manufacturers, wholesalers, and retailers of certain products. Examples of products subject to litter tax include, but are not limited to:
Certain retail sales are not subject to litter tax:
When you take tangible personal property (grapes) and, by applying labor or skill manually or by machinery, turn the grapes into a new and different product (wine) that will be sold, you are conducting a manufacturing activity.
Income from the sale of wine made from purchased fruit juice or slurry should be reported under the Manufacturing B&O tax classification. This income must also be reported under the Wholesaling or Retailing classification.
Out-of-state wineries may sell wine directly to Washington consumers. However, the winery must collect the appropriate state and local sales or use taxes from their customers and send the tax to the Department of Revenue.
Before an out-of-state winery can sell and ship directly to Washington consumers, it must:
Generally, spirits tax does not apply to wine. However, spirits tax does apply to wine exceeding 24% alcohol by volume as indicated on the label.
For more information please see our Spirits (hard liquor) liter tax web page.
Many wineries have tasting rooms. This is a place where potential customers can sample wine before deciding which wine(s) to purchase. Depending on whether or not you charge tasting fees, you will either report retail sales tax and Retailing B&O tax or use tax.
When wine is pulled from inventory and used for wine pours/tasting and a tasting fee is charged, the tasters are considered the consumers. Tasting fees are a retail sale. You will report these fees under the Retailing B&O and Retail Sales tax classifications.
Generally, a “sale at wholesale” or “wholesale sale” means a sale of tangible personal property (including articles you produce or manufacture) to a business or person who will resell the articles in the regular course of business or incorporate the article into another product that will be sold.
Some wineries offer classes such as tasting and evaluating wines, pairing wines, or the winemaking process. How this income is taxable depends on what the customer receives in exchange for the registration fee.
Income from classes that include retail services, such as food or wine tasting, is subject to B&O tax under the Retailing classification and you must collect sales tax.
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