SOFT DRINK AND SYRUP TAX
NOTICE TO ALL DISTRIBUTORS, MANUFACTURERS, WHOLESALE DEALERS, AND RETAILERS.
May 12, 2008
Legislation was enacted during the spring of 2008 creating the Soft Drink and Syrup Tax. (PL 2007, Chapter 629.) Effective August 1, 2008, a tax is imposed on distributors, manufacturers or wholesale dealers selling or offering for sale in this State syrup, simple syrup, bottled soft drinks, and powders or base product(s) used by a retailer to make soft drinks. This is a tax imposed at the distributor level, not at the retail level.
The tax is imposed at the following rates:
$4 per gallon of “syrup” or “simple syrup”
$0.42 per gallon of “bottled soft drinks”
$0.42 per gallon of soft drink that is produced from “powder or base product”
The distributor, manufacturer or wholesale dealer is required to license, report, and remit the tax. Retailers purchasing from unlicensed distributors will be responsible for this tax.
PRODUCTS SUBJECT TO TAX:
Syrup and Simple Syrups
The statute defines “syrup” and “simple syrup” as follows:
"Syrup" means the liquid mixture of basic ingredients used in making, mixing or compounding soft drinks by mixing the syrup with water, simple syrup, ice, fruits, vegetables, fruit juice, vegetable juice or any other product suitable to make a soft drink. 36 MRSA §4851, sub-§14
"Simple syrup" means a mixture of sugar and water. 36 MRSA §4851, sub-§12
Syrups and simple syrups sold or offered for sale to retailers to make soft drinks are subject to a tax of $4.00 per gallon. Some examples of these products are:
- syrup use to make carbonated soda to be sold from a soft drink beverage dispenser
- lemonade or fruit punch syrup used to make fountain drinks
When a manufacturer produces a bottled soft drink, the syrup used in that process would not be subject to this tax. Rather the tax would apply on the bottled soft drink produced.
Syrups packaged for retail sale and intended by the manufacturer to be used by the consumer to make a soft drink are exempt from this tax. An example would be bottled orange flavored syrup which when mixed with water creates an orange soft drink.
Bottled Soft Drinks
The statute defines “bottled soft drink”, “soft drink” and “bottle” as follows:
"Bottled soft drink" means any ready-to-consume soft drink contained in a bottle. 36 MRSA, §4851, sub-§2
"Soft drink" means any nonalcoholic beverage, whether naturally or artificially flavored, whether carbonated or noncarbonated, sold for human consumption, including, but not limited to, soda water, cola and other flavored drinks, any fruit or vegetable drink containing 10% or less of natural fruit juice or natural vegetable juice and all other drinks and beverages commonly referred to as soft drinks, but not including coffee or tea unless the coffee or tea is bottled as a liquid for sale. 36 MRSA, §4851, sub-§13
"Bottle" means any closed or sealed glass, metal, paper or plastic container or any other type of container regardless of the size or shape of the container. 36 MRSA, §4851, sub-§1
Bottled soft drinks sold or offered for sale to retailers are subject to a tax at the rate of 42 cents per gallon. Soft drinks as defined above includes carbonated soda, flavored water, carbonated water, beverages containing 10% or less fruit or vegetable juice, nonalcoholic beverages and energy drinks. Some examples of taxable bottled soft drinks are:
- Carbonated soda such as Pepsi® and Coke® products
- Flavored and/or carbonated water such as Life® and Propel®
- Energy drinks such as Gatorade® and Red Bull®
- Juice drinks such as V8 Splash® and Capri Sun®
- Non-alcoholic drinks such as Goya Malt® and Goya Champagne®
See the exemption section below for examples of exempt products.
A “bottle” as defined above does not have any restrictions to its type of container nor its size or shape. Thus, a soft drink sold by a manufacturer in a keg meets the definition of “bottled soft drink” with the tax being imposed at 42 cents per gallon.
Powders or Base Products
The statute provides the following definition of “powder or base product”:
"Powder or base product" means a solid mixture of basic ingredients used in making, mixing or compounding soft drinks by mixing the powder or other base with water, ice, syrup, simple syrup, fruits, vegetables, fruit juice, vegetable juice or any other product suitable to make a soft drink. 36 MRSA, §4851, sub-§9
Powder or base products sold or offered for sale to retailers are subject to a tax at the rate of 42 cents per gallon. This is based on the number of gallons which the powder or base product will produce when following the manufacturer’s recommended directions. The tax only applies when the powder or base product is sold to a retailer for the purpose of producing a soft drink for sale to the ultimate consumer. An example of this type of product would be a powder lemonade mix used by the retailer to create a lemonade drink sold to customers from a fountain beverage dispenser. If the container of lemonade mix is intended to make 40 quarts, the tax on this container would be $4.20 (40 qts = 10 gallons x 42 cents)
A number of exemptions are provided in the statute as follows: 36 MRSA, §4854
- Sales to the Federal Government
- Products exported from the State by a distributor, manufacturer or wholesale dealer. This only applies to those products that the distributor, manufacturer or wholesale dealer actually delivers out-of-state.
- Powder or base products used in preparing coffee or tea. This would include coffee grounds and teabags.
- Juice or vegetable concentrate with more than 10% juice.
- Juice or vegetable drinks containing more than 10% juice.
Not all juice drinks, vegetable drinks, and vegetable concentrates contain more than 10% juice; therefore all of these products must be reviewed to determine if an exemption applies.
- Sales to other licensed distributors, manufacturers or wholesale dealers. This exemption does not apply to any sale to a retailer. If a retailer is acting as a distributor because the retailer purchases some soft drinks or syrups from an unlicensed distributor, the retailer cannot claim this exemption with respect to products purchased from licensed distributors.
- Liquid or powder infant formula
- Water to which no flavoring has been added and that has not been carbonated.
- Liquid or powder dietary aids for use as supplements or weight reduction (such as Slimfast® and Ensure®)
- Powder or base products intended to be mixed by ultimate consumer. These products are packaged for retail sale and intended by the manufacturer to be used by the ultimate consumer in making a soft drink, such as Kool-Aid®, Crystal Light®, lemonade mix and juice drink concentrates. This exemption applies to liquid and frozen products as well as powder products.
- Any product containing “milk” or milk products. Any soft drink containing animal-based milk or milk products regardless of animal source (cow, goat, etc) or fat content (whole, 2%, 1%, skim, etc) are exempt. This would include 100% milk as well as soft drinks containing milk or milk products, such as bottled Starbucks® coffee, Sobe® Lizard Lava and Lizard Fuel and Yoohoo®. However, since “milk’ is defined in part as “natural liquid milk regardless of animal source or butterfat content”, soft drinks consisting solely of plant-based “milk” or “milk products” (such as rice, soy, and almond) are not exempted.
APPLICATION OF SALES TAX
The soft drink and syrup tax is a tax imposed at the distributor level. If the distributor, manufacturer or wholesaler passes the cost of this tax on to the purchaser and the purchaser is not claiming exemption for resale, the distributor would collect sales tax on the entire sale price, including the soft drink and syrup tax whether or not the tax is separately stated. If the purchaser claims exemption for resale, no sales tax is collected by the distributor. Retailers likewise will impose a sales tax on the full sale price of all taxable soft drinks. No deduction would be made for the soft drink and syrup tax that had been included by the distributor in its price charged for the soft drink or syrup.
Any distributor, manufacturer or wholesale dealer who sells or offers these products (as defined above) for sale to retailers within the State must obtain a license from Maine Revenue Services. Any retailer who purchases these products from an unlicensed distributor, manufacturer or wholesale dealer must obtain a license from Maine Revenue Services. A license is required for each business location and must be noticeably displayed at the place of business for which the license was issued.
Distributors, manufacturers, or wholesale dealers, including retailers required to be licensed, are required to file a monthly return (Form SOFT) and pay the tax on or before the 15 th day of the month following the month in which the sale or purchase was made. With respect to licensed retailers, the duty to report and pay the tax arises when the property is transferred to a retail store for sale to the ultimate consumer.
For more information on this tax, please call (207) 624-9693 or refer to our website at: http://www.maine.gov/revenue/.