Were customer-brewed beer operations legal, permitted, and taxable in South Carolina under RR 95-3?

Plain-English summary

South Carolina Revenue Ruling 95-3 concluded that the described brew-on-premises business was legal, but it had to obtain and continuously maintain a brewery permit.

The business sold beer ingredients and rented customers the space and equipment needed to brew and bottle their own beer. It could offer technical advice, but the beer belonged to the individual customers; the operator did not brew or sell beer to the public. The Department treated the facility as a brewery because it was an establishment where malt liquor was manufactured, even though the operator did not own or sell the finished beer.

The ruling also imposed beer tax on the customer. Sections 12-21-1020 and 12-21-1030 applied to beer offered for sale, which did not describe the customer-made beer. But Section 12-21-1070 taxed a person who acquired untaxed beer from any source for use or consumption. Because the customer gained possession of beer through the customer's own efforts, the Department treated the customer as acquiring the beer and therefore liable for the tax.

The operator could collect the tax from customers and remit it on Form L-600. If it did so, it was responsible only for tax actually collected and received no collection discount. Any uncollected tax remained the customer's liability, though the Department could require the operator's customer records when assessing tax, penalties, and interest.

Common questions

Q: Could a business let customers brew their own beer on its premises? Yes, under the facts and conditions described in RR 95-3.

Q: Did the operator need a permit even though it did not sell beer? Yes. The Department concluded that the facility was a brewery and required a brewery permit.

Q: Who owed the beer tax? The customer who rented the equipment, purchased the ingredients, and produced the beer.

Q: Could the operator collect the tax for the customer? Yes. The ruling allowed collection and remittance, but made the operator responsible only for amounts collected.

Q: Could employees physically make or bottle the customer's beer? Not under the federal conditions quoted in the ruling. Employees could perform incidental cleaning, maintenance, climate control, waste disposal, and quality-control activities, but not production, storage, or bottling for customers.

Citations and references

• S.C. Code Ann. §§ 61-9-1220 and 61-9-1250 (brewery permit provisions)
• S.C. Code Ann. §§ 12-21-1020, 12-21-1030, and 12-21-1070 (beer-tax provisions)
• S.C. Code Ann. § 12-4-330(A) (records and summons authority)
• Code of Federal Regulations §§ 25.205-25.206 (federal personal-production limits identified in the ruling)

Subject

Brew-on-premises operations

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR95-3.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214

SC REVENUE RULING #95-3 (ABC and Tax)

SUBJECT:

Brew-on-premises operations
(Beer Tax; ABC)

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCES:

S.C. Code Ann. Section 61-9-1220 (1976)
S.C. Code Ann. Section 61-9-1250 (1976)
S.C. Code Ann. Section 61-9-20 (1976)
S.C. Code Ann. Section 12-21-1020 (1976)
S.C. Code Ann. Section 12-21-1030 (1976)
S.C. Code Ann. Section 12-21-1060 (Supp. 1993)
S.C. Code Ann. Section 12-21-1070 (1976)
S.C. Code Ann. Section 12-4-330 (Supp. 1993)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (Supp. 1993)
S.C. Revenue Procedure #94-1

SCOPE:

A Revenue Ruling is the Department of Revenue's official advisory
opinion of how laws administered by the Department are to be applied
to a specific issue or a specific set of facts, and provided as guidance for
all persons or a particular group. It is valid and remains in effect until
superseded or modified by a change in the statute or regulations or a
subsequent court decision, Revenue Ruling or Revenue Procedure.

Questions:
1.

Are brew-on-premises operations, as described in the facts, legal under South Carolina
alcoholic beverage control laws?

2.

Is a beer permit necessary for a brew-on premises operation?

3.

Is the beer produced at a brew-on-premises operation, as described in the facts, subject to
the taxes imposed under Code Sections 12-21-1020 through 12-21-1030 (1976.

Conclusions:
1.

Brew-on-premises operations, as described in the facts, are legal in South Carolina.

1

2.

Brew-on-premises operations, as described in the facts, must obtain a brewery permit under
Code Section 61-9-1220 (1990).

3.

Beer produced at a brew-on-premises operation, as described in the facts, is subject to the
beer taxes pursuant to Code Section 12-21-1070 at the rates imposed under Code Sections
12-21-1020 through 12-21-1030 (1976).

The person who rents the equipment and purchases the ingredients to brew beer at a brew-on
premises is liable for the beer tax.
However, the Department of Revenue will allow the operator of a brew-on premise to collect the
tax from customers and remit the tax on Form L-600. The operator of the brew-on premise
would only be responsible for tax collected and would not be entitled to the discount under Code
Section 12-21-1050. Any tax not collected from a particular customer would have to be assessed
against that customer, not the operator of the brew-on premise.
Facts:
Brew-on-premises operations are businesses that sell beer ingredients, and rent to the public the
equipment and space necessary to brew beer. These businesses also provide technical expertise
and advice during the brewing and bottling process. The only beer produced on the premises of
these operations belongs to individual consumers. The operators of these businesses do not brew
beer for sale to the public or to other businesses, and do not sell any beer.
Based on a letter dated March 3, 1993, by Robert G. Hardt, Chief Technical Services, Bureau of
Alcohol, Tobacco and Firearms, federal guidelines allow such operations provided the following
requirements are met:
1.

Written notice is given to the Bureau of Alcohol, Tobacco, and Firearms Regional
Director (compliance) at 2600 Courtney Parkway, N.E., Atlanta, Georgia, 30343. Such
notice must give the name and address of the brew-on-premises facility and the hours
when it is open for business. The proprietor of the facility will update the notice in the
event of a change in name, address, or hours of operation.

2.

The proprietor of the home brew warehouse will keep records relating to individuals
using the facility. Information in records will include the name, address, age, number
of adults residing in the individual's household, and the quantity of beer produced by
each individual during a calendar year. These records may consist of commercial
records or invoices, and will be available for inspection by an ATF officer during the
business hours of the facility.

3.

The proprietor and employees of the facility may not provide physical assistance to, or
on behalf of, customers in the production, storage, or bottling of beer. Incidental
activities such as cleaning, maintenance, and repair of brewing and bottling equipment;
maintenance of climate and temperature control; disposal of spent grains and wastes;
and quality control (including laboratory examination) of beer are not considered as
providing physical assistance in the production of beer.
2

4.

Individuals using the brew-on-premises facility to produce beer are subject to the Code
of Federal Regulations § 25.205 - 25.206. Individuals must be twenty-one years of age,
may produce beer within the prescribed quantity limitations, and may not sell beer so
produced. Beer produced at a brew-on-premises facility may be removed only for
personal or family use or for use in organized affairs.

5.

The proprietor and employees of the brew-on-premises facility may not provide nontax paid beer to customers or potential customers.

6.

Operation of the brew-on-premises facility in a manner contrary to the conditions
outlined above may cause the facility to be considered a brewery subject to notice,
bond, and special tax requirements, and may cause beer produced at such facility to be
subject to payment of excise tax.

Discussion:
ABC Provisions:
There is no law prohibiting brew-on-premises operations in South Carolina. Code Section 61-91220 (1990) states:
A person desiring to construct, maintain, or operate a brewery or winery under this article
first shall apply to the department for a permit. The application must be in writing in a
form the department may prescribe. The applicant is subject to the payment of a biennial
permit tax upon each brewery and on each commercial winery to be established and
operated of two hundred dollars which must be paid to and collected by the Tax
Department before a permit is issued. However, the owner and operator of a winery who
consumes in the operation only the fruits produced on his own farm or premises is subject
to the payment of a permit fee of only ten dollars biennially. The permit expires
December biennially. The fees charged for permits for the operation of breweries and
wineries must be prorated by reducing the permit cost by one-eighth January 1st, April
1st, July 1st, and October 1st each year. A brewer or commercial wine manufacturer
commencing business during one of these intervals shall pay for the eighth of the permit
period in which business is commenced and for the eighth of the permit period during the
remainder of the period, but no refund may be made to a dealer who ceases business after
securing a permit.
Code Section 61-9-1250 (1990) states that: " Any person operating a brewery or winery without
having secured a permit from the Department or after his permit has been canceled by the
Department shall be guilty of a misdemeanor . . . ."
The term "brewery" is not defined in our code. The Second College Edition of the American
Heritage Dictionary defines the term as "an establishment for the manufacture of malt liquors."
Where the words of a statute are clear there is no room for construction and such terms must be
given their literal meaning. Duke Power Co. V. South Carolina Tax Commission, 292 S. C. 64,
354 S. E.2d 902 (1987). Accordingly, even though the brew-on-premises operation will not be

3

selling beer, it will be operating a brewery and a permit must be obtained from the Department
before initiating construction of the brewery. In addition, the operators of the facility must
maintain a current permit the entire time the business is in operation.
Therefore, brew-on-premises operations are legal in South Carolina and must obtain a brewery
permit under Code Section 61-9-1250.
Tax Provisions:
Code Section 12-21-1020 (1976) reads: "There shall be levied and collected on all beer offered
for sale in containers of one gallon or more in this State a license tax of six-tenths cent per ounce
. . . ."
Code Section 12-21-1030 (1976) states: "If beer be offered for sale in bottles or cans, there shall
be levied and collected a tax of six-tenths cents per ounce or fractional quantity thereof. . . ."
These taxing statutes require that for a tax to be payable, beer must be offered for sale. In the
instant case, there is no offer to sell beer. Only the ingredients to make beer are sold, and the
customer makes his or her own beer. Accordingly, no taxes are due on the beer produced in
brew-on premises operations under Code Sections 12-21-1020 and 12-21-1030.
However, the provisions of Code Section 12-21-1070 must also be considered. That section
reads:
Every person, firm, corporation, club, or association, or any organization or individual
within this State, importing, receiving, or acquiring from without the State or from any
other sources whatever, beer or wine as defined in [Section] 12-21-1010 on which the tax
imposed by this chapter has not been paid, for use or consumption within this State, shall
be subject to the payment of a license tax at the same rates provided in [Sections] 12-211020 and 12-21-1030. (Emphasis added.)
It is an accepted practice in South Carolina to resort to the dictionary to determine the literal
meaning of words used in statutes. For cases where this has been done, see Hay v. South
Carolina Tax Commission, 273 SC 269, 255 S.E.2d 837 (1979); Fennell v. South Carolina Tax
Commission, 233 S.C. 43, 103 S.E.2d 424 (1958); Etiwan Fertilizer Co. v. South Carolina Tax
Commission, 217 SC 484, 60 SE2d 682 (1950).
The Second College Edition of the American Heritage Dictionary defines the word "acquire" to
mean "[t]o gain possession of" and "[t]o get by one's own efforts".
As such, persons who rent the equipment and purchase the ingredients to brew beer at a brew-on
premises "acquire" beer under Code Section 12-21-1070, and therefore, are liable for the beer
tax. (The rates are established under Code Sections 12-21-1020 and 12-21-1030.)
Based on the above, the operator of a brew-on premise is not responsible for the tax; however,
such operators need to be aware of the following:

4

1.

The Department of Revenue will allow the operator of a brew-on premise to collect the
tax from customer and remit the tax on Form L-600. The operator of the brew-on
premise would only be responsible for tax collected and would not be entitled to the
discount under Code Section 12-21-1050. Any tax not collected from a particular
customer would have to be assessed against that customer, not the operator of the brewon premise.

2.

The Department of Revenue has the authority under Code Section 12-4-330(A) to
summon witnesses to produce records with respect to the State beer tax, and therefore,
may require the operator of the brew-on premises to produce records concerning
customers. Such records may be used by the Department, at its discretion, to assess the
beer taxes, penalties, and interest against a customer if the customer has not remitted
the tax to the Department or if the brew-on premises has not collected the tax and
remitted to the Department on the behalf of the customer.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Burnet R. Maybank III
Burnet R. Maybank, III, Director

Columbia, South Carolina
April 17
1995

For questions concerning brew-on premises and the ABC provisions of the law, contact Nicholas
Sipe at (803) 734-0478. For questions concerning brew-on premises and the tax provisions of the
law, contact John P. McCormack at (803) 737-4438.

5