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AN ACT

RELATING TO LIQUOR EXCISE TAX; ADJUSTING THE DEFINITION OF

"SMALL WINER OR WINEGROWER"; CLARIFYING TAXATION ON CERTAIN

WINE TRANSFERS; PROVIDING FOR PAYMENT OF TAX BY A WHOLESALER

WHEN A WHOLESALER DISTRIBUTES WINE PRODUCED BY A NEW MEXICO

WINERY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 7-17-2 NMSA 1978 (being Laws 1966,

Chapter 49, Section 2, as amended) is amended to read:

"7-17-2. DEFINITIONS.--As used in the Liquor Excise Tax

Act:

A. "alcoholic beverages" means distilled or

rectified spirits, potable alcohol, brandy, whiskey, rum,

gin, aromatic bitters or any similar beverage, including

blended or fermented beverages, dilutions or mixtures of one

or more of the foregoing containing more than one-half of one

percent alcohol by volume, but "alcoholic beverages" does not

include medicinal bitters;

B. "beer" means an alcoholic beverage obtained by

the fermentation of any infusion or decoction of barley, malt

and hops or other cereals in water and includes porter, beer,

ale and stout;

C. "cider" means an alcoholic beverage made from

the normal alcoholic fermentation of the juice of sound, ripe

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apples that contains not less than one-half of one percent of

alcohol by volume and not more than seven percent of alcohol

by volume;

D. "department" means the taxation and revenue

department, the secretary of taxation and revenue or any

employee of the department exercising authority lawfully

delegated to that employee by the secretary;

E. "fortified wine" means wine containing more

than fourteen percent alcohol by volume when bottled or

packaged by the manufacturer, but "fortified wine" does not

include:

(1) wine that is sealed or capped by cork

closure and aged two years or more;

(2) wine that contains more than fourteen

percent alcohol by volume solely as a result of the natural

fermentation process and that has not been produced with the

addition of wine spirits, brandy or alcohol; or

(3) vermouth and sherry;

F. "microbrewer" means a person who produces fewer

than five thousand barrels of beer in a year;

G. "person" includes, to the extent permitted by

law, a federal, state or other governmental unit or

subdivision or an agency, department, institution or

instrumentality thereof;

H. "small winegrower" means a winegrower who

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produces fewer than nine hundred fifty thousand liters of

wine in a year;

I. "spirituous liquor" means alcoholic beverages,

except fermented beverages such as wine, beer, cider and ale;

J. "wholesaler" means a person holding a license

issued under Section 60-6A-1 NMSA 1978 or a person selling

alcoholic beverages that were not purchased from a person

holding a license issued under Section 60-6A-1 NMSA 1978;

K. "wine" means an alcoholic beverage other than

cider that is obtained by the fermentation of the natural

sugar contained in fruit or other agricultural products, with

or without the addition of sugar or other products, and that

does not contain more than twenty-one percent alcohol by

volume; and

L. "winegrower" means a person licensed pursuant

to Section 60-6A-11 NMSA 1978."

Section 2. Section 7-17-5 NMSA 1978 (being Laws 1993,

Chapter 65, Section 8, as amended) is amended to read:

"7-17-5. IMPOSITION AND RATE OF LIQUOR EXCISE TAX.--

A. There is imposed on a wholesaler who sells

alcoholic beverages on which the tax imposed by this section

has not been paid an excise tax, to be referred to as the

"liquor excise tax", at the following rates on alcoholic

beverages sold:

(1) on spirituous liquors, one dollar sixty

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cents ($1.60) per liter;

(2) on beer, except as provided in Paragraph

(5) of this subsection, forty-one cents ($.41) per gallon;

(3) on wine, except as provided in

Paragraphs (4) and (6) of this subsection, forty-five cents

($.45) per liter;

(4) on fortified wine, one dollar fifty

cents ($1.50) per liter;

(5) on beer manufactured or produced by a

microbrewer and sold in this state, provided that proof is

furnished to the department that the beer was manufactured or

produced by a microbrewer, eight cents ($.08) per gallon;

(6) on wine manufactured or produced by a

small winegrower and sold in this state, provided that proof

is furnished to the department that the wine was manufactured

or produced by a small winegrower, ten cents ($.10) per liter

on the first eighty thousand liters sold and twenty cents

($.20) per liter on all liters sold over eighty thousand

liters but less than nine hundred fifty thousand liters; and

(7) on cider, forty-one cents ($.41) per

gallon.

B. The volume of wine transferred from one

winegrower to another winegrower for processing, bottling or

storage and subsequent return to the transferor shall be

excluded pursuant to Section 7-17-6 NMSA 1978 from the

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taxable volume of wine of the transferee. Wine transferred

from an initial winegrower to a second winegrower remains a

tax liability of the transferor, provided that if the wine is

transferred to the transferee for the transferee's use or for

resale, the transferee then assumes the liability for the tax

due pursuant to this section.

C. A transfer of wine from a winegrower to a

wholesaler for distribution of the wine transfers the

liability for payment of the liquor excise tax to the

wholesaler upon the sale of the wine by the wholesaler."

Section 3. Section 7-17-6 NMSA 1978 (being Laws 1984,

Chapter 85, Section 4, as amended) is amended to read:

"7-17-6. DEDUCTION--INTERSTATE SALES--

WINEGROWER-TO-WINEGROWER TRANSFERS.--

A. A wholesaler may deduct the liters of

spirituous liquors, gallons of beer and liters of wine sold

and shipped to a person in another state from the units of

alcoholic beverages subject to the tax imposed by the Liquor

Excise Tax Act; provided that the department may require the

wholesaler to submit evidence satisfactory to the department

that the units have been sold and shipped to a person in

another state.

B. A winegrower may deduct the liters of wine

transferred to the winegrower from another winegrower for

processing, bottling or storage and subsequent return to the

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transferor from the units of wine subject to the liquor

excise tax on the licensed premises of the winegrower."

Section 4. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2008.