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Business Taxes Law Guide—Revision 2024

BTLG Table of Contents > Alcoholic Beverage Tax Law > Chapter 5 > entire chapter

Alcoholic Beverage Tax Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 14. Alcoholic Beverage Tax

Chapter 5. Tax on Distilled Spirits.

Article 1 Imposition of Tax

Article 2 Presumptions and Exemptions

Article 1. Imposition of Tax

32201. Rate. An excise tax is imposed upon all distilled spirits sold in this state or pursuant to Section 23384 of the Business and Professions Code by manufacturers, distilled spirits manufacturer's agents, brandy manufacturers, rectifiers, or wholesalers, or sellers of distilled spirits selling distilled spirits with respect to which no tax has been paid within areas over which the federal government exercises jurisdiction, at the following rates:

On all distilled spirits of proof strength or less, two dollars ($2) per wine gallon, and at a proportionate rate for any quantity, and on all nonliquid distilled spirits containing 50 percent or less alcohol by weight two cents ($0.02) per ounce avoirdupois, and at a proportionate rate for any quantity.

All distilled spirits in excess of proof strength, and all nonliquid distilled spirits containing more than 50 percent alcohol by weight, shall be taxed at double the above rate.

History—Stats. 1955, p. 1859, operative September 7, 1955, but also operative July 1, 1955, as an amendment to former Section 24465 of the Business and Professions Code, increased the rate from 80 cents to $1.50 and added subdivision (b). Stats. 1967, p. 2526, operative August 16, 1967, revised this section, increasing the rate to $2.00 and making related changes in (b). Stats. 1978, Ch. 827, effective January 1, 1979, deleted "(a)" preceding "An excise tax" in the first paragraph, in the second paragraph substituted "two dollars ($2)" for "one dollar and fifty cents ($1.50)" deleted "until August 16, 1967, and on and after August 16, 1967, two dollars ($2) per wine gallon" and substituted "and on all nonliquid distilled spirits containing 50 percent or less alcohol by weight two cents ($0.02) per ounce avoirdupois", added "and all nonliquid distilled spirits containing more than 50 percent alcohol by weight," following "proof strength" in the third paragraph and deleted subdivision (b).

Federal military reservations.—The sale of distilled spirits to a person on a military reservation over which the federal government has exclusive jurisdiction is subject to the tax imposed by the Alcoholic Beverage Control Act. McKesson & Robbins, Inc. v. Collins, (1937) 18 Cal.App.2d 648.

Tax collectible upon sale to retailer.—The tax is collectible upon sales from wholesalers to retailers. The tax is not collectible upon a sale by one wholesaler to another prior to a sale to a retailer. People v. Tux Winery Co., (1937) 20 Cal.App.2d 700.

Yosemite National Park.—See note following Section 32151.

Additional excise taxes imposed on licensed wholesaler upheld.—The finding of the State Board of Equalization that the proper amount of taxes had not been paid by a wholesaler of distilled spirits, although not conclusive, should be upheld in the absence of a showing that it was arbitrary or capricious. Where an examination of the wholesaler's books showed a discrepancy between disbursements and returns and indicated that numerous sales were made unaccompanied by the necessary revenue stamps, as required by the former provisions of the Alcoholic Beverage Control Act, the board was not bound to grant allowances for gifts or exchanges in the absence of testimony establishing the facts respecting such transfers. Empire Vintage Company v. Collins, (1940) 40 Cal.App.2d 612. Supreme Court hearing denied November 14, 1940.

Deficiency assessments.—Even though prior to 1937 the State Board of Equalization was not expressly authorized to levy deficiency assessments against distilled spirits wholesalers who failed to pay the full amount of their tax, no assessment or reassessment was necessary to create the liability, as the Alcoholic Beverage Control Act itself levied the tax. Even if the power to assess a deficiency did not exist until 1937, the amendment of that year creating the procedure applies to liabilities existing prior to its effective date. Rathjen Bros. Inc. v. Collins, (1942) 50 Cal.App.2d 774.

Delivery of whisky to steamship company for sale on high seas.—Where a steamship company which was the holder of an importer's license and a retailer's distilled spirits license for specific boats mailed an order for whisky from its office in California to the seller's office, also in California, to be shipped from outside the State for delivery within this State, and where the whisky so shipped was stored within the State and was subsequently delivered to a ship of the buyer in a California port for sale to passengers thereon beyond the territorial jurisdiction of the United States, such transaction constituted a sale within the meaning of the Alcoholic Beverage Control Act (as it existed in 1935). Gooderham and Worts, Ltd. v. Collins, (1942) 50 Cal.App.2d 716. That case, together with Rathjen Bros., Inc. v. Collins, (1942) 50 Cal.App.2d 774, also holds that the fact that the whisky is sold in federal bond to a steamship company and that no federal excise tax is collected is immaterial to the question of liability for state excise tax.

Distilled spirits stamp requirements.—A licensed wholesaler who sold distilled spirits to retail licensees unaccompanied by excise stamps as required by the Alcoholic Beverage Control Act (as it read prior to 1941), is liable for tax imposed by the act. If the bottles were broken after the stamps were affixed, subsequent replacements should have been accompanied by stamps, but if the cases had not yet been broken the wholesaler could have properly replaced the broken goods and the stamps sent with the first shipment could have been used to pay the tax. Tonklin Distributing Company, Inc. v. Collins, (1942) 50 Cal.App.2d 790.

Deliveries in this State to out-of-state purchaser taxable.—Under the Alcoholic Beverage Control Act as it read prior to 1937, a transaction involving whisky constituted a sale thereof in this State so as to render the seller liable for excise taxes thereon, where the order for the liquor was solicited by the seller's salesman out of the State and by him delivered to the seller's place of business within this State, where the liquor was sold to an out-of-state purchaser not holding a license under the act, where the order called for "delivery 'FOB' " at the seller's warehouse in this State, and where, after the order had been filled therefrom and also delivered to the purchaser in this State, the liquor was transported out of the State by the purchaser's employees. The fact that a sale of alcoholic beverages is unlawful or unauthorized does not exempt it from the excise tax. Gooderham and Worts, Ltd. v. Collins, (1943) 59 Cal.App.2d 309.

Shipment to military reservation.—The levy of the excise tax upon the seller of whisky to the United States Army Medical Corps does not violate the implied immunity of the federal government from state taxation under the United States Constitution, and the fact that the tax may be passed on to the government in the purchase price does not invalidate the tax. National Distillers Products Corporation v. State Board of Equalization, (1947) 83 Cal.App.2d 35.

32202. Tax on sales by common carriers. An excise tax is levied on sales made in this state of distilled spirits by common carriers on board boats, trains, and airplanes, or by persons licensed to sell distilled spirits on board such boats, trains, and airplanes, at the same rates as set forth in Section 32201. On or before the first day of each month such common carriers and such other licensed persons shall forward to the board a report of the sales of distilled spirits so made in the calendar month preceding the previous calendar month, in such detail and form as the board may prescribe and shall be filed using electronic media together with a payment sufficient to pay the tax on the sales.

History—Stats. 1963, p. 2935, in effect September 20, 1963, deleted the word "verified" preceding "report" in the second sentence. Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, substituted "state" for "State" after "made in this" in the first sentence and "prescribe and …electronic media" for "prescribe," after "board may" in the last sentence.

32203. Examination of reports. The board shall from time to time make examinations to determine the accuracy of the reports of sales submitted by common carriers and by persons licensed to sell distilled spirits on board boats and trains operated by common carriers. The board may make such rules for the enforcement of the provisions of Section 32202 as it deems necessary to adequately insure the collection of the tax.

Article 2. Presumptions and Exemptions

32211. Presumption of sale. It shall be presumed that all distilled spirits acquired by any taxpayer have been sold in this State by him unless one of the following is proved to the satisfaction of the board, in reports on forms prescribed by the board:

(a) That the distilled spirits are still in the possession of the licensee.

(b) That the distilled spirits have been sold or delivered to another licensed distilled spirits manufacturer, rectifier, importer, or wholesaler.

(c) That the distilled spirits have been exported without this State or sold for export by the licensee making the report and actually exported from this State within 90 days from the date of the sale.

(d) That prior to the termination of possession the distilled spirits have been lost through unintentional destruction.

(e) That prior to the termination of possession there has been an unaccounted for loss, but the unaccounted for loss shall not exceed a tolerance to be fixed by the board.

(f) That the distilled spirits are otherwise exempt from taxation under this part.

Presumptions favor distilled spirits deficiency assessments.—The burden of proving that distilled spirits were sold in nontaxable transactions is on the taxpayer and disposals of distilled spirits unaccounted for are subject to the excise tax. Rathjen Bros., Inc. v. Collins, (1942) 50 Cal.App.2d 774; Sauers Wholesale Co. v. Collins, (1942) 50 Cal.App.2d 786; Tonkin Distributing Co., Inc. v. Collins, 50 Cal.App.2d 790. Where the State Board of Equalization determines a deficiency in accordance with the procedure set forth in the statute by ascertaining and working from opening and closing inventories for a taxable period, the resulting figure is presumed under the statute to represent the amount of taxable sales. Should a taxpayer seek to recover deficiency taxes paid under protest he has the burden of proving that the figure thus arrived at is not correct. Rathjen Bros., Inc. v. Collins, (1942) 50 Cal.App.2d 765.

Rule-making power of board.—The State Board of Equalization is given power in the general enabling provision of Section 24.25 of the Alcoholic Beverage Control Act (predecessor to Section 32212 of this code) to prescribe the manner in which the taxpayer must furnish proof in rebuttal of the presumption provided in Section 24.2 of the act (predecessor to this section) and this power is not limited by Section 24.2, but is in addition to it. As part of such manner of proof the board can prescribe the time at which data on which the taxpayer relies must be furnished to it. American Distilling Co. v. Johnson, (1955) 132 Cal.App.2d 73.

32212. Exemptions; brandy. The tax is not imposed upon any distilled spirits specifically mentioned in subdivisions (a) to (f), inclusive, of Section 32211.

The tax is not imposed upon the sale of brandy to a licensee of another state pursuant to the provisions of Section 23108 of the Business and Professions Code.

Any claim for exemption from taxes under Section 32211 shall be made to the board in such manner as the board shall prescribe.

Forfeiture of exemption.—The authority given the State Board of Equalization in Section 24.25 of the Alcoholic Beverage Control Act (predecessor of this section) to make binding rules as to the manner of claiming an excise tax exemption extends to the whole procedure applicable to the claiming of such exemption, and by failing to comply with the provision of rule 54a (now rule 2563) of the board, requiring the filing of SBE Form 260 at the time of sale for proof of sales exported in vehicles owned by the purchaser, the taxpayer forfeited its claim of exemption, notwithstanding the fact that it furnished to the board proof of exportation upon said form prior to the hearing on the petition for redetermination of the additional tax. American Distilling Co. v. Johnson, (1955) 132 Cal.App.2d 73.

32213. Sales to passenger common carriers exempt. Whenever distilled spirits are sold by manufacturers, rectifiers, importers, or wholesalers to common carriers engaged in interstate or foreign passenger service for use or sale by the carriers partly within the State and partly without the State on board boats, trains, or airplanes, or to persons licensed to sell distilled spirits on board such boats, trains, or airplanes, the tax shall not be levied on the sales made by manufacturers, rectifiers, importers, or wholesalers.

32214. Credit; use in food products. If taxes have been paid on distilled spirits sold to a person who holds a permit and identification number authorizing the filing of a claim for drawback of federal distilled spirits excise taxes under the Federal Non-Beverage Drawback Regulations and the distilled spirits have been used in the manufacture of food products, the taxpayer may claim and shall be allowed credit with respect to the taxes in any report or return made under this part.

History—Added by Stats. 1963, p. 2295, in effect September 20, 1963.