According to a report from the U.S. Attorney’s Office, District of Maryland, a federal grand jury indicted Republic National Distribution Company, LLC, and several of its employees, on charges arising from a scheme to defraud the state and city of New York and registered New York wholesalers.

Full report:  https://www.ttb.gov/news/liquor-wholesaler-indicted.shtml

The 23 count indictment essentially alleges that the wholesaler and its employees moved product for retail sale from the State of Maryland (which has a liquor excise tax of approximately $1.50 per gallon) to the State of New York (which has a liquor excise tax of approximately $7.44 per gallon) thereby evading the significantly higher New York tax rate imposed on wholesale product storage.

An indictment is not a finding of guilt, it is a charge.  If convicted during a later criminal proceeding, the wholesaler and its employees face a $250,000 fine, and the individual defendants also face a maximum sentence of 20 years in prison, in addition to other possible penalties and fines.

For reference, the applicable wholesale gallonage tax rate here in Tennessee is $.31966 per liter or $1.21 per gallon on the sale or distribution of wine and $1.16237 per liter or $4.40 per gallon on the sale or distribution of spirits.

Beer in Tennessee is subject to a $4.29 per barrel (of 31 liquid gallons) special privilege tax and a wholesale beer tax of $35.60 per 31 gallon barrel.

Here at FPWL, we assist manufacturers, wholesalers, importers, and retailers with navigating the ever-changing alcoholic beverage industry and legal environment.  Please do not hesitate to contact us with any questions.

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    By: Curtis R. Harrington II

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