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SALT TALK: NYS Ends Sales Tax on Beer Flights in Anticipation of Proposed Gross Receipts Tax on Data

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Feb 10, 2020 11:40:00 AM
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We are all going to need a drink after this.  So, in the spirit of helping New Yorkers determine their favorite fermented beverage, Governor Cuomo signed into law a measure exempting certain beer tastings from New York State Sales Tax.  If you consume a beer tasting of not more than five different samples, each being five ounces or less, no tax applies. Such samplings are commonly referred to as “beer flights”.

The liquor laws in virtually every state tend to be unique, complicated, and arcane.  I’ll never forget my first visit to a brewery about fifteen years ago.  It was in Saratoga, New York and the rules were so outdated that the brewery wasn’t even allowed to charge for a tasting, let alone tax it.  Not wanting to be one of the many moochers in the room there for the free beer, I bought a growler full of my favorite brew.  I sat down at my table and proceeded to open the growler.  Next thing I knew, the “mature” woman behind the bar literally jumped over the mahogany top and took a dive on top of me and my open growler.  Here I was trying to support the brewery and show up the freeloaders.  How was I supposed to know you were only allowed to drink the free beer in the tasting room and not the beer you paid for.

New Yorkers have progressed from not charging for beer to having to pay and now at least the tax burden is eliminated to some extent.  I’m convinced the motive is to help us tolerate the latest but most arcane tax proposal to see the light of day since Prohibition.  Assembly Bill 9112, introduced January 20th, 2020, seeks to impose:

“a tax equal to five percent tax on the gross income is hereby imposed upon every corporation which derives income from the data individuals of this state share with such corporations.”

What’s even a little more frightening than the proposed tax itself is that the language quoted above is just about the complete explanation of the tax itself.  The rest of the two pages in the Bill talks about the setting up of a “Data Fund,” the establishment of a “New York Data Fund Board” to oversee the Fund, the number of Commissioners to be part of the Fund and how they will be appointed. 

I understand that liquor was a complicated issue for government a century ago, cannabis is presenting similar issues today, but do we really need another state commission to oversee data?  Intentions may be altruistic in that companies are profiting from the wealth of information that is attached to each and every one of us.  But does this legislation seek to protect us from its misuse or just add another layer of government oversight to our lives?  It is going to be interesting to see how this plays out in New York and throughout the rest of the country.  In the meantime, go taste a new and exciting brew at your local brewery.  The sales tax is on me. If you have questions contact me at wberkowitz@berdonllp.com or your Berdon Advisor.

Wayne Berkowitz, a tax partner and co-leader of the State and Local Tax Group at Berdon LLP, advises on the unique requirements of governments and municipalities across the nation.

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