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.
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.