Alcoholic Beverages Tax

Who is liable for the alcoholic beverages tax?

Persons who first transfer or first sell alcoholic beverages (liquor, wine and beer) in Alaska are required to pay the tax. Alcoholic beverages taxes are collected primarily from wholesalers, distributors and brew/pub owners. Taxes are paid on a monthly basis.

As a brew/pub owner, what requirements do I need to meet with the Department of Revenue?

Brew/pubs must be licensed and bonded before operating. There is no license fee but a $25,000 surety bond is required. Persons located and operating wholly in Alaska may apply for a permit in lieu of the bond requirement.

What are the alcohol beverage tax rates for liquor, wine and beer?

liguor = $12.80/gallon; wine = $2.50/gallon;
beer = $1.07/ gallon; qualified small brewery beer = $.35/gallon

Who pays the tax?

Every brewer, distiller, bottler, jobber, retailer, wholesaler, or manufacturer who sells alcoholic beverages in the state or who consigns shipments of alcoholic beverages into the state, whether or not the alcoholic beverages are brewed, distilled, bottled, or manufactured in the state, shall pay the excise tax.

Am I required to pay Alaska Alcohol Beverage Excise Tax on liquor products I import into the state for personal consumption?

Alcoholic Beverage Excise Tax is not an “import” tax, but a tax on sales of alcoholic beverages in the state.

Are there any exemptions from Alcoholic Beverage Excise Tax?

Yes, the following sales of alcoholic beverages are exempt from the alcoholic beverage excise tax: Sales to the military. The authority for this exemption is found at 4 United States Code s 107. Entities, such as food and beverage service corporations which have contracts with any branch of the Armed Forced to provide alcoholic beverages over which the Armed Forces has no control, are not exempt from the excise tax, even if 100% of their sales were made to military personnel.

Sales for religious and medicinal purposes. The authority for this exemption is implied under the provisions of AS 04.21.080(b)(1).It has been the position of the Alcoholic Beverage Control Board (ABC) that the statutory definition of an “alcoholic beverage” does not include alcohol consumed for religious and medicinal purposes. Historically, the Tax Division has concurred with this finding.

How does a “small brewery” obtain an exemption from tax at the higher rate?

A small brewery, may qualify to pay the reduced rate of 35 cents a gallon on sales of the first 60,000 barrels of beer sold in the state each fiscal year, in accordance with AS 43.60.010(c). The brewer must file with the Department a copy of a Bureau of Alcohol, Tobacco and Firearms acknowledged copy of the Brewer’s Notice of Intent to Pay Reduced Rate of Tax required under 27 C.F.R. 25.167 for the calendar year in which the fiscal year begins for which the partial exemption is sought.

If proof of eligibility is not received by the Department before June 1, the tax rate under this subsection does not apply until the first day of the second month after the notice is received by the Department.

What are the penalties for failure to obtain an Alcoholic Beverage Warehouse License?

If a person owns, consigns, stores or allows the storage of alcoholic beverages except in a licensed warehouse, upon which the Alcoholic Beverage Excise Tax imposed has not been paid, that person is liable for the tax and is presumed to have committed fraud. In addition to the tax, a penalty will be imposed under AS 43.05.220(c).

AS 43.05.220(c) states: If a tax deficiency or part of a tax deficiency is due to fraud, a civil fraud penalty equal to 50 percent of the tax due or $500, whichever is greater, shall be added to the tax. This penalty is in addition to penalties determined under (a) or (b) of this section.

I have a license with Alcoholic Beverage Control Board. Do I also need a license with the Alaska Department of Revenue, Tax Division?

Yes, the Department of Revenue (through the Tax Division) issues licenses authorizing the brewer, distiller, bottler, jobber, wholesaler, or manufacturer (liable for the payment of the tax) to sell alcoholic beverages in the state or to consign shipments of alcoholic beverages in the state.