How are South Carolina micro-distillery tours and liquor tastings taxed — the tour charge, the tasting, and giveaways?

Plain-English summary

South Carolina Revenue Ruling #22-1 explains how three taxes — the liquor-by-the-drink tax, the admissions tax, and the sales tax — apply to micro-distillery (and manufacturing-facility) tours and liquor tastings after a 2021 change to S.C. Code § 61-6-1140 (Act No. 60 of 2021), effective May 17, 2021.

What the 2021 law changed. A licensed micro-distillery may offer tastings held in conjunction with a tour of its premises. Under the amended law:

• The distillery may not charge for the alcoholic liquor consumed at a tasting.
• The distillery may charge for the tour that's required alongside the tasting.
• The tour price must be on a scale tied to how much liquor is poured — a base price for a one-ounce tasting, increasing in half-ounce increments.

(Before the amendment, a distillery could charge for the liquor at a tasting and had to collect and remit the liquor-by-the-drink tax.)

How the three taxes apply now:

1. Liquor-by-the-drink tax (§ 12-33-245): does NOT apply to the tour or the tasting — whether or not the distillery charges for the tour.
2. Admissions tax (§ 12-21-2410) and sales tax (Chapter 36): do NOT apply to the charge for the tour.
3. Sales tax DOES apply to the liquor poured — but as a "withdrawal for use" / manufacturer's-use tax, not on the customer. Because the distillery manufactured the liquor in South Carolina and consumes it in South Carolina by pouring it for tastings, it owes sales tax on the liquor's fair market value under § 12-36-910(B)(4). Fair market value = the retail price the distillery charges for a bottle of that liquor (per the definition in Reg. 117-309.17).

Free promotional items (e.g., souvenir shot glasses). The treatment depends on whether the distillery also sells the item:

• If it customarily sells the item (e.g., $5 shot glasses in the gift shop): it buys them tax-free at wholesale but owes sales tax on the item's retail fair market value when it withdraws it from inventory to give away on the tour (and again when it actually sells one). Example 1: sales tax on the $5 retail value of each free shot glass.
• If it does not sell the item separately: it simply pays sales or use tax when it buys the item from its supplier, and owes nothing more when it hands the item to a patron — regardless of whether the tour is charged. Example 2.

One thing the ruling doesn't cover: micro-distilleries that offer tastings and sales still owe the same taxes as wholesalers under Chapter 33, Title 12 (§ 61-6-1130(A); §§ 12-33-410, 12-33-420, 12-33-425, 12-33-460). RR #22-1 flags this but doesn't analyze it.

What this means for you

Micro-distilleries and manufacturing facilities

Restructure so you charge for the tour, not the pour. The tour charge is clean of liquor-by-the-drink, admissions, and sales tax — but don't forget the use tax on the liquor you pour: you owe sales tax on the retail bottle value of tasting liquor you made in South Carolina. For giveaways, know which bucket each item is in: sell it in your gift shop too? → tax on its retail value when you pull it for a freebie; only give it away? → just pay tax when you buy it. If you followed the older RR #19-3 after May 17, 2021, the Department says to review your liquor-by-the-drink and sales tax returns for that period.

Accountants and tax professionals

The key move here is recognizing the tasting liquor as a manufacturer's withdrawal for use taxed at fair market value (§ 12-36-910(B)(4); Reg. 117-309.17), even though the customer-facing tour charge escapes all three taxes. Apply the two-branch promotional-item rule based on whether the item is customarily sold. Remember the wholesaler-equivalent Chapter 33 taxes still apply to tastings/sales generally — RR #22-1 expressly leaves those out of scope.

Everyone else

This is niche guidance for licensed distilleries and manufacturers offering on-site tours and tastings. It doesn't affect ordinary retail purchases. Included here for completeness of South Carolina's advisory-opinion library.

Common questions

Q: Is the charge for a distillery tour taxed?
A: No. A tour charge (with a tasting) is not subject to the liquor-by-the-drink tax, the admissions tax, or the sales tax — whether or not the distillery charges for the tour.

Q: Can the distillery charge for the liquor at the tasting?
A: No. Since May 17, 2021, a micro-distillery may not charge for the alcoholic liquor consumed at a tasting, though it may charge for the required tour on a scale tied to the amount poured.

Q: Then how is the tasting liquor taxed?
A: The distillery owes sales tax on the fair market value (its retail bottle price) of the South Carolina-made liquor it pours, as tangible personal property it manufactured and consumes in South Carolina (§ 12-36-910(B)(4)).

Q: Do we owe tax on free souvenir shot glasses?
A: If you also sell the item, yes — sales tax on its retail value when you withdraw it from inventory to give away. If you never sell the item separately, you only pay sales/use tax when you buy it, and owe nothing when you hand it over.

Q: We used the old ruling after the law changed — what now?
A: RR #22-1 supersedes RR #19-3 for tours/tastings on or after May 17, 2021. The Department says to review your liquor-by-the-drink and sales tax returns for that period.

Citations and references

Statutes and regulations:

• S.C. Code Ann. § 61-6-1140 — micro-distillery tours, tastings, and retail sales (amended by Act No. 60 of 2021, effective May 17, 2021)
• S.C. Code Ann. § 12-33-245 — the liquor-by-the-drink tax (does not apply to the tour/tasting)
• S.C. Code Ann. § 12-21-2410 — the admissions tax (does not apply to the tour charge)
• S.C. Code Ann. § 12-36-910(B)(4) — sales tax on tangible personal property manufactured and used/consumed in SC by the manufacturer (the tasting liquor)
• S.C. Code Ann. § 61-6-1130(A) — micro-distilleries remit wholesaler-equivalent taxes (Chapter 33, Title 12: §§ 12-33-410, -420, -425, -460), noted but not analyzed
• S.C. Code Regs. 117-309.17 — the definition of "fair market value" (also applied to §§ 12-36-910(B)(4) and 12-36-1310(B)(4))

Related Department ruling (described in prose, not linked): RR #19-3, "Micro-Distillery Tours and Liquor Tastings," which RR #22-1 supersedes and which still governs tours/tastings conducted before May 17, 2021.

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR22-1.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214-0575

SC REVENUE RULING #22-1
SUBJECT:

Micro-Distillery and Manufacturing Facility Tours and Liquor
Tastings
(Liquor by the Drink Tax, Admissions Tax, and Sales Tax)

EFFECTIVE DATE:

For Tours and Tastings 1 on or after May 17, 2021

SUPERSEDES:

SC Revenue Ruling #19-3 and all previous advisory opinions and any
oral directives in conflict herewith.

REFERENCES:

S.C. Code Ann. Section 61-6-1140 (Act No. 60 of 2021) (enacted May
17, 2021)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #09-3

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the public
and to Department personnel. It is an advisory opinion issued to apply
principles of tax law to a set of facts or general category of taxpayers.
It is the Department’s position until superseded or modified by a
change in statute, regulation, court decision, or another Departmental
advisory opinion.

INTRODUCTION
Licensed micro-distilleries in South Carolina are permitted to offer tastings to consumers that are
held in conjunction with a tour of the on-site licensed premises. During the 2021 Legislative
Session, Code Section 61-6-1140, concerning tours, tastings, and retail sales at micro-distilleries
and manufacturing facilities, was amended effective May 17, 2021. Applicable changes to a
micro-distillery of alcoholic liquors offering tours and tastings include:
• The micro-distillery may not charge for alcoholic liquors consumed at a tasting.

Code Sections 61-6-1140 and 61-6-1150 establish the requirements for liquor tastings and liquor sales by a microdistillery. This document does not address these requirements.
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• The micro-distillery may charge for the tour that is required in conjunction with the tasting.
• Liquor by the drink tax is not applicable to the tour or the tasting of alcoholic liquors in
conjunction with the tour.
• The amount charged for a tour must be on a scale that accords with the amount of alcoholic
liquors for on-premises consumption that is dispensed to consumers, beginning with a base
tour price that corresponds with a tasting of one ounce of alcoholic liquor and increases
incrementally by one-half ounce.
Prior to these amendments, a micro-distillery was permitted to charge for alcoholic liquors
consumed at a tasting and was required to collect and remit the liquor by the drink tax.
The purpose of this document is to address questions concerning changes in the application of
the liquor by the drink tax and the sales tax to micro-distilleries and manufacturing facilities 2
conducting tours and tastings on or after May 17, 2021.
QUESTIONS AND ANSWERS

1. Q. Are charges for a tour of a micro-distillery, during which the micro-distillery provides a
   tasting of the alcoholic liquor it manufactures, subject to the liquor by the drink tax under
   Code Section 12-33-245?
   A. No. The liquor by the drink tax does not apply to a micro-distillery providing tours
   authorized under Code Section 61-6-1140, whether or not there is a charge for such tours.
   Note: Code Section 61-6-1130(A) provides that a micro-distillery or manufacturer
   desiring to offer tastings and sales of alcoholic liquors to consumers at its licensed
   premises shall remit taxes to the Department for alcoholic liquors sold and dispensed in
   an amount equal to taxes paid by wholesalers on alcoholic liquors. While not discussed in
   this advisory opinion, micro-distilleries offering tastings and sales of liquor are subject to
   the same taxes as wholesalers under Chapter 33 of Title 12. See Code Sections 12-33410, 12-33-420, 12-33-425, and 12-33-460.
2. Q. Are charges for the tour of a micro-distillery subject to admissions tax under Code
   Section 12-21-2410 or sales tax under Chapter 36 of Title 12?
   A. No. Neither the admissions tax nor the sales tax is applicable to charges for the tour of a
   micro-distillery.

For simplicity, this document refers only to micro-distilleries providing tours and tastings, however, it also applies
to manufacturing facilities conducting tours and tastings.
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3. Q. What is the application of the sales tax to the use of alcoholic liquor manufactured in
South Carolina by the micro-distillery and used by the micro-distillery to provide tastings
during a tour?
A. The sales tax applies to the fair market value of tangible personal property manufactured
in South Carolina and used or consumed within South Carolina by the manufacturer.
Code Section 12-36-910(B)(4). The micro-distillery, as the manufacturer of the liquor, is
liable for the sales tax based on the fair market value of a bottle of liquor manufactured in
South Carolina by the micro-distillery and used by the micro-distillery to provide tastings
during a tour. The fair market value is the amount for which a bottle of liquor is sold at
retail by the micro-distillery. 3

4. Q. What is the application of the sales tax to promotional items provided for no charge (e.g.,
   shot glasses) with the micro-distillery tasting tour?
   A. The application of the sales tax to promotional items provided as part of a tour of a
   micro-distillery is as follows:
   a. When a micro-distillery provides tangible personal property (e.g., a shot glass) to
   patrons as part of a tour and also customarily sells the item, then the micro-distillery
   will owe sales tax when the item is withdrawn from inventory. The sales tax amount
   is based on the fair market value of the item. The fair market value is the amount for
   which the tangible personal property (e.g., a shot glass) is sold at retail by the microdistillery. 4 See Example 1 below.
   b. When a micro-distillery provides tangible personal property (e.g., a shot glass) to
   patrons as part of a tour but does not customarily sell the item, then the microdistillery will owe sales or use tax when the micro-distillery purchases the item from
   its supplier. The micro-distillery does not owe sales or use tax when the item is
   provided to the tour patron. See Example 2 below.
   EXAMPLES
   Example 1 – Tangible Personal Property Provided for Free as Part of Tour; Items Also
   Sold Separately
   Facts: A micro-distillery conducts a tour and tasting in accordance with alcoholic beverage laws.
   The micro-distillery sells shot glasses in the gift shop for $5 and also allows any patron
   participating in a tour and tasting to keep the shot glass used for the tasting as a souvenir at no
   charge.
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   The definition of fair market value is defined in Regulation 117-309.17 for purposes of Code Section 12-3690(1)(c) as: “the price at which these goods are offered for sale by the person withdrawing them. All cash or other
   customary discounts which he would allow to his customers may be deducted; however, in no event can the amount
   used as gross proceeds of sales be less than the amount paid for the goods by the person making the withdrawal.” It
   is the opinion of the Department that the definition of fair market value in Regulation 117-309.17 also applies to
   Code Sections 12-36-910(B)(4) and 12-36-1310(B)(4).
   4
   See footnote 3 and Regulation 117-309.17 for the definition of fair market value.

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Conclusion: The micro-distillery is to purchase all shot glasses at wholesale (tax free) from its
suppliers. The micro-distillery, as a retailer of shot glasses (and other items) in its gift shop must
remit the sales tax when it withdraws the shot glasses from inventory to provide free of charge as
part of a tour and must remit the sales tax when it sells shot glasses in its gift shop. With respect
to the shot glasses in this example that are provided free of charge as part of a tour, the microdistillery is liable for the sales tax based on the fair market value of the shot glasses used by the
micro-distillery to provide tastings. The fair market value is the amount for which a shot glass is
sold at retail by the micro-distillery in its gift shop. In this example, the fair market value of each
shot glass is $5.
Example 2 – Tangible Personal Property Only Provided for Free as Part of Tour; Items
Not Sold Separately
Facts: A micro-distillery conducts a tour and tasting in accordance with alcoholic beverage laws.
The micro-distillery does not sell shot glasses separate from the tour, e.g., at its gift shop or online. The micro-distillery provides a shot glass for use in the tasting. The patron may keep the
shot glass used for the tasting.
Conclusion: The purchase of the shot glasses by the micro-distillery from its suppliers is subject
to sales tax or use tax. The micro-distillery does not owe sales tax when the shot glass is used by,
and given to, the tour patron. The answer is the same whether there is or is not a charge for the
tour.
EFFECTIVE DATE - FILING AND PAYMENT OF LIQUOR BY THE DRINK TAX
AND SALES TAX
This advisory opinion is applicable to micro-distillery and manufacturing facility tours and liquor
tastings on or after May 17, 2021. The guidance issued by the Department in SC Revenue Ruling

19-3, “Micro-Distillery Tours and Liquor Tastings,” applies to tours and tastings conducted

prior to May 17, 2021. Taxpayers who followed the guidance in SC Revenue Ruling #19-3 after
the effective date of the amended law, should review their liquor by the drink returns and sales
tax returns for tours and liquor tastings conducted on or after May 17, 2021. As discussed above,
for tours and tastings conducted on or after May 17, 2021, the liquor by the drink tax does not
apply and charges for the tour are not subject to sales tax, however, sales tax applies to the fair
market value of tangible personal property manufactured in South Carolina by the manufacturer
and used in providing tastings as part of the tour.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
March 3
, 2022
Columbia, South Carolina

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