Was wine used in a New York winery's wine tastings exempt from sales and use tax before the wine-tasting exemption's December 1, 1997 effective date?

Plain-English summary

Swedish Hill Vineyard asked the Department whether wine and wine products it gave out at wine tastings were exempt from sales and use tax for periods before December 1, 1997. New York had added a specific exemption, Tax Law § 1115(a)(33), covering wine or wine product that a farm winery, winery, wholesaler, or importer furnishes at a wine tasting (held under Alcoholic Beverage Control Law § 80) to a customer or prospective customer who drinks it at the tasting. That exemption was enacted in 1997 as part of Chapter 389 of the Laws of 1997.

The Department said the exemption is not retroactive. The enacting legislation's own effective-date clause states that the relevant sections "shall take effect December 1, 1997, and shall apply to sales made, services rendered and uses occurring on or after such date." Under standard New York statutory-construction rules, a new law is presumed to apply only prospectively unless the legislature clearly says otherwise, and nothing in Chapter 389 indicated the wine-tasting exemption should reach back to cover earlier tastings. So wine used in tastings held before December 1, 1997 remained subject to tax; only tastings on or after that date benefit from the exemption.

What this means for you

Wineries and farm winery owners

If you've been giving away wine at licensed tastings, remember the § 1115(a)(33) exemption only protects tastings held on or after December 1, 1997. Any tax exposure for wine used in tastings before that date is not cured by this exemption -- it simply didn't exist yet.

Accountants and tax professionals working with beverage-industry clients

This is a useful, general illustration of how New York reads effective-date clauses: an explicit "applies to sales made, services rendered, and uses occurring on or after [date]" clause forecloses any retroactivity argument, even for a narrow, taxpayer-favorable exemption. The same prospective-only default (McKinney's Statutes §§ 51.b-51.d) would apply to any other newly enacted exemption unless its effective-date language says otherwise.

Common questions

Q: Is wine given away at a licensed wine tasting exempt from New York sales tax?
A: Yes, for tastings held on or after December 1, 1997, under Tax Law § 1115(a)(33), as long as the tasting is held in accordance with Alcoholic Beverage Control Law § 80.

Q: What about tastings held before December 1, 1997?
A: Those are not covered by the exemption. The statute applies only to sales, services, and uses occurring on or after its effective date, and there's no indication the legislature intended it to reach back further.

Q: Can another winery rely on this ruling for its own pre-1997 tastings?
A: The retroactivity conclusion reflects a straightforward reading of the statute's own effective-date language and general rules of statutory construction, but this is still an advisory opinion binding the Department only as to the specific petitioner and facts presented.

Citations and references

Statutes and rules:

• Tax Law § 1115(a)(33) (wine tasting exemption)
• Chapter 389 of the Laws of 1997, Part A, § 99 (enacting § 1115(a)(33))
• Chapter 389 of the Laws of 1997, Part A, § 219(16) (effective date, December 1, 1997)
• Alcoholic Beverage Control Law § 80 (wine tastings)
• McKinney's Statutes §§ 51.b, 51.c, 51.d (prospective vs. retroactive statutory construction)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1998.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a98_77s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-98(77)S
Sales Tax
November 6, 1998

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S980615A

On June 15, 1998, the Department of Taxation and Finance received a
Petition for Advisory Opinion from Swedish Hill Vineyard, Inc., 4565 Route 414,
Romulus, New York, 14541.
The issue raised by Petitioner, Swedish Hill Vineyard, Inc., is whether
wine and wine products produced by Petitioner and used in wine tastings were
exempt from sales and use tax prior to December 1, 1997.
Applicable Law
Section 1115(a) of the Tax Law provides, in part:
Receipts from the following shall be exempt from the tax on
retail sales imposed under subdivision (a) of section eleven hundred
five and the compensating use tax imposed under section eleven
hundred ten:
*

*

*

(33) Wine or wine product furnished by the official agent of
a farm winery, winery, wholesaler, or importer at a wine tasting
held in accordance with section eighty of the alcoholic beverage
control law to a customer or prospective customer who consumes such
wine at such wine tasting.
Section 1115(a)(33) of the Tax Law was enacted by Section 99 of Part A of
Chapter 389 of the Laws of 1997.
Section 219(16) of Part A of Chapter 389, the
effective date provision of Section 99, provides:
(16) sections ninety-six, ninety-seven, ninety-eight and
ninety-nine of this act shall take effect December 1, 1997, and
shall apply to sales made, services rendered and uses occurring on
or after such date, although made, rendered or occurring under a
prior contract;
Opinion
In essence, the issue raised by Petitioner is whether the exemption from
sales tax as provided in Section 1115(a)(33) of Article 28 of the Tax Law, and
as enacted by Chapter 389 of the Laws of 1997, has retroactive application.
Generally, statutes are construed as prospective, unless the language of the
statute, either expressly or by necessary implication, requires that it be given
retroactive construction.
Statutes are generally presumed to operate
prospectively and not retroactively.
Generally, the question of whether a
statute should be construed as prospective or retrospective is to be determined

-2­
TSB-A-98(77)S
Sales Tax
November 6, 1998

by ascertaining the legislative intent.
and 51.d.

See McKinney's Statutes §§ 51.b, 51.c

The effective date language of Section 219(16) of Part A of Chapter 389 of
the Laws of 1997, as it applies to the amendment which added Section 1115(a)(33)
of the Tax Law, sets forth that the exemption contained in Section 1115(a)(33)
shall apply to sales made, and uses occurring, on or after December 1, 1997.
There is no language in the relevant sections of Chapter 389 that indicates the
amendment is to have retroactive application. Therefore, in accordance with
Sections 51.b, 51.c and 51.d of McKinney's Statutes, the exemption provided in
Section 1115(a)(33) of the Tax Law applies only to sales or uses of wine or wine
product that occur on or after December 1, 1997.

DATED:

November 6, 1998

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.