Sales Tax - PA Manufacturer of Ready to Drink Cocktail (RTDC)
A licensed Pennsylvania manufacturer must charge sales tax on sales to a RTDC Permit Holder unless presented with a properly executed exemption certificate (REV-1220 [PDF]). A RTDC Permit Holder may use an exemption certificate when purchasing RTDC from a licensed Pennsylvania manufacturer. The RTDC Permit Holder must present the licensed Pennsylvania manufacturer with an exemption certificate at the time of purchase or within 60 days of purchase.
Please see the Department’s regulations at 61 Pa. Code § 32.2 for guidance regarding the proper use of exemption certificates.
Sales Tax – Retail Liquor Licensees – Off Premise Consumption
RTDC Permit Holders that are also retail liquor licensees are required to collect the sales tax from the consumers to whom they sell RTDC for off-premises consumption only.
A retail liquor licensee may use a properly completed exemption certificate when purchasing RTDCs from a Pennsylvania manufacturer for off-premises consumption only.
Sales Tax – Retail Liquor Licensees – On Premise Consumption
RTDC Permit Holders that are also retail liquor licensees should not collect sales tax on the sale of RTDCs for on premises consumption.
The retail liquor licensee will have to remit use tax if the purchase of RTDC was done with the exemption certificate and then the RTDC were sold for on-premise consumption (see example No. 4 below).
If a retail liquor licensee sells RTDC for both on premise and off premise consumption and uses an exemption certificate when it purchases RTDCs, it is imperative that the licensee keep records sufficient to demonstrate that it is paying sales or use tax on all RTDCs purchased for on-premises consumption.
How to obtain a sales tax refund
If the permit holder paid sales tax at the time of purchase and then collects sales tax on the sale of the same RTDC, the permit holder may obtain a refund of sales tax in one of two methods.
First, a RTDC Permit Holder may claim a credit for Taxes Paid; Purchases Resold (TPPR) on its sales and use tax return. See 61 Pa. Code § 58.11 (explaining how to claim a TPPR credit).
Second, a RTDC Permit Holder may file a Petition for Refund with the Department’s Board of Appeals.
Sales Tax – Distributors and Importing Distributors
RTDC Permit Holders that are distributors and importing distributors are required to collect the sales tax from the consumers to whom they sell RTDC. If the permit holder paid sales tax at the time of purchase, the permit holder may obtain a refund of sales tax in one of the two methods described above.
Purchases of RTDC from a Pennsylvania Liquor Store
Upon purchases from the Pennsylvania Liquor Control Board (PLCB), the RTDC Permit Holder must pay sales tax to the PLCB. The Permit Holder may claim a refund of any taxes paid to the Pennsylvania Liquor Store on products which it also charges sales tax to the ultimate consumer. A refund may be obtained in one of the two methods described above.
Examples
ABC, Inc., a licensed Pennsylvania distributor, purchases five cases of RTDCs from a PLCB store for $100. ABC, Inc. must pay sales tax when purchasing the RTDCs from the PLCB store. ABC, Inc. may claim a TPPR credit when filing its Sales and Use Tax return to recover the sales tax it paid upon purchase of the RTDC.
ABC, Inc., a licensed Pennsylvania distributor, purchases five cases of RTDCs from a licensed Pennsylvania manufacturer for $100. ABC, Inc. may use a properly completed exemption certificate when purchasing the RTDCs from the licensed Pennsylvania manufacturer.
DEF, Inc. holds a R license from the PLCB. DEF, Inc. sells RTDCs for on-premises and off-premises consumption. DEF, Inc. purchases five cases of RTDCs from a PLCB store for $100, and pays $6 in sales tax when making its purchase ($1.20 per case). DEF, Inc. sells four of the five cases for on premises consumption. DEF, Inc. sells one case for off-premises consumption. DEF, Inc. may claim a TPPR credit of $1.20 when filing its sales and use tax return to recover the sales tax it paid upon purchase of the one case of RTDCs that was subsequently sold for off-premises consumption.
DEF, Inc. holds a R license from the PLCB. DEF, Inc. sells RTDCs for on-premises and off-premises consumption. DEF, Inc. purchases five cases of RTDCs from a licensed Pennsylvania manufacturer for $100. DEF, Inc. provides the licensed Pennsylvania manufacturer with a properly completed exemption certificate when making the purchase. DEF, Inc. sells four of the five cases for on premises consumption. DEF, Inc. sells one case for off-premises consumption. DEF, Inc. must remit use tax of $4.80 when filing its sales and use tax return for the four cases sold for on-premises consumption. Further, DEF, Inc. must charge sales tax when it sells the one case of RTDCs for off-premises consumption.