Liquor Tax Law and Legal Definition

The distribution of liquor is a state enterprise under the auspices of some state liquor authorities. This tax may be imposed upon computed on the actual price paid by the consumer, as well as the first sale of liquor being subject to the sales and use tax at the time of purchase. Other states impose a flat rate on a certain volume of liquor. Certain exemptions may apply, such as wine used for sacramental purposes. Local laws should be consulted for specidic requirements in your area.

The following is an example of a state liquor taxation statute:

"Sec. 8-1. A tax is imposed upon the privilege of engaging in business as a manufacturer or as an importing distributor of alcoholic liquor other than beer at the rate of $0.185 per gallon for cider containing not less than 0.5% alcohol by volume nor more than 7% alcohol by volume, $0.73 per gallon for wine other than cider containing less than 7% alcohol by volume, and $4.50 per gallon on alcohol and spirits manufactured and sold or used by such manufacturer, or as agent for any other person, or sold or used by such importing distributor, or as agent for any other person. A tax is imposed upon the privilege of engaging in business as a manufacturer of beer or as an importing distributor of beer at the rate of $0.185 per gallon on all beer manufactured and sold or used by such manufacturer, or as agent for any other person, or sold or used by such importing distributor, or as agent for any other person. Any brewer manufacturing beer in this State shall be entitled to and given a credit or refund of 75% of the tax imposed on each gallon of beer up to 4.9 million gallons per year in any given calendar year for tax paid or payable on beer produced and sold in the State of Illinois. For the purpose of this Section, "cider" means any alcoholic beverage obtained by the alcohol fermentation of the juice of apples or pears including, but not limited to, flavored, sparkling, or carbonated cider. The credit or refund created by this Act shall apply to all beer taxes in the calendar years 1982 through 1986. The increases made by this amendatory Act of the 91st General Assembly in the rates of taxes imposed under this Section shall apply beginning on July 1, 1999. A tax at the rate of 1¢ per gallon on beer and 48¢ per gallon on alcohol and spirits is also imposed upon the privilege of engaging in business as a retailer or as a distributor who is not also an importing distributor with respect to all beer and all alcohol and spirits owned or possessed by such retailer or distributor when this amendatory Act of 1969 becomes effective, and with respect to which the additional tax imposed by this amendatory Act upon manufacturers and importing distributors does not apply. Retailers and distributors who are subject to the additional tax imposed by this paragraph of this Section shall be required to inventory such alcoholic liquor and to pay this additional tax in a manner prescribed by the Department. The provisions of this Section shall be construed to apply to any importing distributor engaging in business in this State, whether licensed or not. However, such tax is not imposed upon any such business as to any alcoholic liquor shipped outside Illinois by an Illinois licensed manufacturer or importing distributor, nor as to any alcoholic liquor delivered in Illinois by an Illinois licensed manufacturer or importing distributor to a purchaser for immediate transportation by the purchaser to another state into which the purchaser has a legal right, under the laws of such state, to import such alcoholic liquor, nor as to any alcoholic liquor other than beer sold by one Illinois licensed manufacturer or importing distributor to another Illinois licensed manufacturer or importing distributor to the extent to which the sale of alcoholic liquor other than beer by one Illinois licensed manufacturer or importing distributor to another Illinois licensed manufacturer or importing distributor is authorized by the licensing provisions of this Act, nor to alcoholic liquor whether manufactured in or imported into this State when sold to a "non-beverage user" licensed by the State for use in the manufacture of any of the following when they are unfit for beverage purposes:

  1. Patent and proprietary medicines and medicinal, antiseptic, culinary and toilet preparations;
  2. Flavoring extracts and syrups and food products;
  3. Scientific, industrial and chemical products, excepting denatured alcohol;
  4. Or for scientific, chemical, experimental or mechanical purposes;
  5. Nor is the tax imposed upon the privilege of engaging in any business in interstate commerce or otherwise, which business may not, under the Constitution and Statutes of the United States, be made the subject of taxation by this State.
  6. The tax herein imposed shall be in addition to all other occupation or privilege taxes imposed by the State of Illinois or political subdivision thereof.
  7. If any alcoholic liquor manufactured in or imported into this State is sold to a licensed manufacturer or importing distributor by a licensed manufacturer or importing distributor to be used solely as an ingredient in the manufacture of any beverage for human consumption, the tax imposed upon such purchasing manufacturer or importing distributor shall be reduced by the amount of the taxes which have been paid by the selling manufacturer or importing distributor under this Act as to such alcoholic liquor so used to the Department of Revenue.
  8. If any person received any alcoholic liquors from a manufacturer or importing distributor, with respect to which alcoholic liquors no tax is imposed under this Article, and such alcoholic liquor shall thereafter be disposed of in such manner or under such circumstances as may cause the same to become the base for the tax imposed by this Article, such person shall make the same reports and returns, pay the same taxes and be subject to all other provisions of this Article relating to manufacturers and importing distributors.
  9. Nothing in this Article shall be construed to require the payment to the Department of the taxes imposed by this Article more than once with respect to any quantity of alcoholic liquor sold or used within this State.
  10. No tax is imposed by this Act on sales of alcoholic liquor by Illinois licensed foreign importers to Illinois licensed importing distributors."