Oregon Administrative Rules › Chapter 845 - OREGON LIQUOR AND CANNABIS COMMISSION › Division 8 - PRIVILEGE TAX › Section 845-008-0060 - Small Winery Exemption

Current through Register Vol. 63, No. 7, July 1, 2024
ORS 473.050(5)
				provides that no tax shall be levied, collected or imposed upon the first
				40,000 gallons of wine sold annually in Oregon from a United States
				manufacturer of wine producing less than 100,000 gallons annually. This rule
				explains the criteria to qualify for this small winery exemption.
(1) A winery qualifies to take the small
			 winery exemption if the winery produces less than 100,000 gallons of wine
			 during the calendar year in which the exemption is claimed. A winery's total
			 production for the year is measured by the volume of wine produced by
			 fermentation as reported to the Alcohol and Tobacco Tax and Trade Bureau (TTB)
			 for the calendar year. Wine is considered produced for Oregon tax purposes when
			 fermentation is completed or the wine is removed from the fermentor.
(2) The winery claiming the small winery
			 exemption must hold a federal basic permit to produce wine and must have
			 produced a minimum of 1 gallon of wine in the calendar year that the exemption
			 is taken. A winery that holds a federal basic permit to produce wine but does
			 not produce any wine during a calendar year may not take the small winery
			 exemption on any wine it removed from federal bond during that calendar
			 year.
(3) A winery may exempt no
			 more than 40,000 gallons of wine under this exemption during a calendar year.
			 While eligibility for the small winery exemption is based on the current year's
			 wine production (less than 100,000 gallons), the exemption itself (no more than
			 40,000 gallons combined total) can be taken on any wine removed from bond
			 during the year regardless of the year it was produced.
(4) A winery may claim the small winery
			 exemption for wine that it removes from federal bond and intends, at the time
			 of removal, to sell in Oregon. The exemption may be taken at the time of
			 removal if the winery intends in good faith to sell the wine in Oregon. Wine
			 qualifies as being sold in Oregon if ownership of the wine is, or is expected
			 to be, transferred to a person or entity located within this state.
(5) The winery claiming the small winery
			 exemption must have removed the exempt wine from federal bond. No exemption is
			 available for wine that was not removed from bond by the winery claiming the
			 exemption, such as wine that the winery received or imported federally
			 tax-paid, or wine that the winery has transferred to another entity in
			 bond.
(6) The Commission will deny
			 the small winery exemption if it determines that allowance of the exemption
			 would benefit a winery who would otherwise fail to qualify for use of the
			 exemption.
(7) Wine that is claimed
			 as exempt under the small winery exemption may not be claimed as exempt from
			 tax under any other provisions of ORS 473.
(8) A bonded winery or warehouse may claim
			 the small winery exemption on behalf of an eligible small winery for wine that
			 the winery or warehouse receives from the transferring small winery and removes
			 from bond, provided that all of the following requirements are met:
(a) The wine on which the exemption is
			 claimed must have been produced by the small winery that transfers the
			 exemption and must be eligible for exemption if it were to have been removed
			 from bond by the transferring winery. The exemption may not be transferred on
			 wine that the transferring winery received from another producer.
(b) The winery or warehouse taking the
			 exemption on behalf of the transferring winery must remove the wine from
			 bond.
(c) The transferring winery
			 must hold title to the wine for which the exemption is transferred at the time
			 the wine is removed from bond.
(d)
			 The total amount of the exemption that may be claimed by a winery or warehouse
			 on behalf of a small winery in any calendar year may not exceed 40,000 gallons
			 minus all amounts claimed under the small winery exemption by the transferring
			 small winery or by others on its behalf for that year. The transferring winery
			 must provide to the transferee all information necessary for the transferee to
			 determine the amount of exemption it may claim.