State announces new tax exemption for wine tastings

Tasting for the Long Island Merlot Alliance's annual Merliance blend in 2011. (Credit: Barbaraellen Koch, file)
Tasting for the Long Island Merlot Alliance’s annual Merliance blend in 2011. (Credit: Barbaraellen Koch, file)

They’ll drink to this!

Local wineries and breweries both got some good news this week, courtesy of New York State. 

The state this week made wine tastings at wineries tax free, and also allocated $350,000 in research for hops and malting barley to help specialists understand the varieties and differences that work best for New York agriculture, according to a press release from Gov. Andrew Cuomo.

Both moves came as a result of input received during a recent state Wine, Beer, Spirits and Cider Summit in April.

“Anything that eliminates any type of burden we’ve had is certainly a welcome change in the law,” said Sal Diliberto, the president of the Long Island Wine Council and the owner of Diliberto Winery in Jamesport.

Traditionally, a winery had to collect tax when making retail sales of wine and wine products, whether they were sold by bottle or glass, according to the governor. Although state tax law provided an exemption for when the products are used “at an event sponsored by a winery, farm winery, wholesaler or importer at its licensed premises,” it did not previously cover wine tastings.

As a result of input from winery owners at the Summit, the State Taxation and Finance Department worked with the Division of Alcoholic Beverage Control to clarify the exemption in a Technical Memorandum, the governor said.

Mr. Diliberto said Gov. Cuomo has been an advocate of wineries and breweries.

“He has really been very good about listening to the problems of small businesses and farms and wineries and making changes,” Mr. Diliberto said. “It doesn’t surprise me they are doing something like this. He’s pro-tourism, that’s the big thing, and he knows that the wine trails and the micro-breweries and the micro-distilleries bring people out and they encourage farming.”

Jim Trezise, the president of the New York Wine & Grape Foundation, said the sales tax exemption for wine tastings is good for consumers, wineries and the state.

“Consumers can sample a number of different wines tax-free to discover the ones they like best, which of course will be subject to sales tax as usual if they are purchased. This saves consumers money, and saves wineries the time and effort of calculating and collecting sales tax on every sample. It’s ‘entrepreneurial government’ at its best.”

Mr. Diliberto was unsure, offhand, how much of a savings the tasting room exemption will result in locally, but he said the Wine Council is in the early stages of doing a study  to see how much money wineries and breweries bring to the area and how much they pay in taxes.

As for the $350,000, a portion of that funding will go toward research being conducted on a hops plot at the Geneva Experiment Station at Cornell University, where researchers are evaluating approximately 30 varieties of hops to see which ones work best for New York’s craft brewing industry, the governor said.

The researchers also are experimenting with pest management techniques to see which tools work best to combat certain diseases affecting hops, such as downy mildew, he said

Currently there are approximately 225 acres of hops planted in New York State, of which 150 acres will be harvested this year—amounting to over 100,000 pounds of hops.

Mr. Diliberto said as more people start making beer, they will have to start buying more and more of their hops from New York State growers in order to meet the demand.

The increase locally also means more land is being farmed, Mr. Diliberto said.

Statewide, the number of microbreweries has risen rising from 40 in 2011 to 100 today—an increase of 150 percent, as craft breweries become more popular, according to Mr. Cuomo, and 48 new farm breweries have opened statewide.

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