Tax Guide for Winemakers
Ingredients

This section provides guidance on the application of tax to ingredients and products used in the winemaking process. Sales of ingredients and products to winemakers may or may not be subject to tax, depending on whether they fall into one of the following categories:

• Food Products – Sales of food products intended for human consumption are not subject to tax. Therefore, ingredients used in winemaking such as grapes, berries, and yeast are food products for human consumption and these sales are not subject to tax.
• Raw Materials – Tax does not apply to sales of non-food products or ingredients to winemakers that are purchased for incorporating into the finished product (wine).
• Manufacturing Aids – Tax applies to the sales of non-food products or ingredients that are purchased for use in manufacturing or producing the wine and not for the purpose of physically incorporating the item into the finished product.

Important Note: The application of tax for the ingredients and products listed on this page is based on their use in winemaking as described in the Code of Federal Regulations (CFR), Section 24.246, Materials authorized for the treatment of wine and juice. If the actual use of a product or ingredient is different than its described category on this page, (as it aligns with Section 24.246 of the CFR), then the stated tax application for your purchases of the listed ingredient or product may be different and you should contact us for further guidance on the correct tax application regarding your specific use of the ingredient or product in question. Please visit our How to Contact Us page.

Food Products Are Not Subject to Tax

Sales of food products are generally not subject to tax when used to produce wine.

Examples of food products used to produce wine include:

• Albumen
• Autolyzed yeast
• Bakers yeast mannoprotein
• Carbohydrase
• Casein (a milk product)
• Catalase
• Cellulase
• Enzymes
• Gelatin
• Glucose oxidase
• Lysozyme
• Milk products
• Pectinase
• Protease
• Soy flour
• Urease
• Yeast

Raw Materials or Ingredients Incorporated into Wine May Be Purchased for Resale

Winemakers may purchase raw materials for resale (without the payment of tax) that become a component part of the finished product that will be resold.

Examples include ingredients used to stabilize wine, increase the body and astringency of the wine, and to sterilize or preserve the wine.

The following ingredients and products may generally be purchased for resale when incorporated into, and resold with, the finished product:

Purchases of Manufacturing or Processing Aids Are Subject to Tax

Tax generally applies to sales of products that are consumed in manufacturing wine and are not physically incorporated into the finished product. If property is purchased primarily as an aid in the manufacturing process, it is subject to tax even though some portion may remain in the finished product.

Examples of manufacturing aids used to produce wine include:

• Products that stabilize juice color before it is fermented into wine
• Chemicals that assist yeast during fermentation
• Fining agents to clarify wine (and typically filtered out of product)
• Products that precipitate a chemical reaction during or after fermentation, prior to bottling or selling wine.

The sales of the following products to winemakers when used as manufacturing aids are subject to tax:

• Acetaldehyde
• Activated carbon
• Aluminosilicates
• Ammonium phosphate
• Biotin
• Calcium pantothenate
• Copper sulfate
• Chitosan
• Defoaming agents
• Ferrocyanide compounds
• Ferrous sulfate
• Folic acid
• Granular cork
• Inositol
• Isinglass
• Magnesium sulfate
• Niacin
• Polyvinylpolypyrrolidone
• Pyridoxine
• Silica gel
• Thiamine hydrochloride

Please note, if the actual use of these products or ingredients is different than described above (as it aligns with Section 24.246 of CFR), the stated application of tax may be different and you should contact us for further guidance on the correct tax application regarding your specific use of the ingredient or product in question (How to Contact Us).

Filing a Claim for Refund

If you believe you have paid tax in error on your purchases of ingredients or products used in winemaking, you may be entitled to a refund of the overpaid tax.

A refund may generally be claimed at any time within the statute of limitations (generally, within three years). If you are seeking a refund for overpaid taxes on purchases the procedures are different depending on whether the original purchase was subject to sales tax versus use tax.

If the tax you paid was sales tax, you must request a refund from the retailer. The retailer would then file a claim for refund with the California Department of Tax and Fee Administration (CDTFA). As the purchaser, you will need to provide the retailer with a completed resale certificate (CDTFA-230, General Resale Certificate or similar form) and documentary evidence that the original purchase should have qualified as raw material intended to be incorporated into the finished product. However, if the item on which you paid sales tax is a food product, a resale certificate is not necessary.

If the tax you paid is use tax (typically use tax applies when you purchase from an out-of-state vendor), you may file a claim for refund directly with the CDTFA. Simply complete form CDTFA-101, Claim for Refund or Credit and mail it to the address provided. Include as the reason for the refund that the property purchased qualifies as a food product or raw material intended to be incorporated into the finished product.

If you paid sales or use tax on a manufacturing aid or other taxable property and subsequently resell it before making any use of it, you may take a deduction of the purchase price of the property on your sales and use tax return. You must take the deduction under the heading “Tax-paid purchases resold” on your return in the same period in which the sale of the property is included.

For more information on how to file a claim for refund, see publication 117, Filing a Claim for Refund.