Were prepackaged mixed drinks and wine coolers subject to Texas sales tax or alcoholic-beverage gross-receipts tax?

Plain-English summary

The Comptroller consulted a Texas Alcoholic Beverage Commission agent about two kinds of prepackaged alcoholic drinks.

A prepackaged mixed drink such as “Jim Beam and Soda” could be sold only at a location with a mixed-beverage permit. Its sale was therefore subject to alcoholic-beverage gross-receipts tax rather than sales tax.

A prepackaged wine cooler could also be sold under a beer-and-wine permit, so its tax treatment depended on the seller. A mixed-beverage-permit location paid gross-receipts tax, while a grocery store or other retailer licensed only for beer and wine collected sales tax.

Common questions

Was a prepackaged mixed drink subject to sales tax? No under the permit facts stated; it was subject to gross-receipts tax.

Were wine coolers always treated the same way? No.

When did a wine-cooler seller collect sales tax? When the seller was a grocery store or other retailer licensed only for beer and wine.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8607L0743A10

Original ruling text

July 3, 1986

Dear ***:

Thank you for your recent letter. The 1985 Annual Report you requested
is being sent under separate cover.

I discussed the two products you mentioned with an agent of the Texas
Alcoholic Beverage Commission. They said that a prepackaged mixed drink
such as "Jim Beam and Soda", could only be sold at locations with a mixed
beverage permit. As such, it would always be subject to the Alcoholic
Beverage Gross receipts tax and not to the sales tax.

On the other hand, a prepackaged "wine cooler" could be sold at any
location with a beer and wine permit. Therefore, the taxability would
depend on where the product was sold. Locations with a mixed beverage
permit would pay the gross receipts tax while grocery stores and other
retailers licensed only for beer and wine would collect the sales tax.

This opinion is based on the facts presented. If there are additional
or different facts, the opinion may change.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at
the Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division