Alcohol and Tobacco Laws

Presenter: Jason Evans, Deputy Director Carol Logan, Section Coordinator

Property and Special Taxes Division

AlcoholLicensesTaxesTime RestrictionsAge RestrictionsPenaltiesWhere to sellDeliveriesSamplesHospitality RoomsNew Legislation

April 12, 2012

Alcohol Licenses and fees

Code Description

Cost

Off-Sale Licenses

PB Off-Sale Malt Beverage License 200.00PF Off-Sale Malt Beverage

Off-Sale SD Farm Wines License225.00

PL Off-Sale Package Liquor License(issued only within municipalities)

Price set locally

PW Off-Sale Wine License for SD Wineries Only

150.00

On-Off

Sale Licenses

RB On-Off Sale Malt Beverage License 300.00RW On-Off Sale Wine 500.00BW On-Off Sale Malt Beverage

On-Off Sale SD Farm Wines License325.00

On-Sale Licenses

RL On-Sale Retail Liquor License Price set locally

CL On-Sale Convention Center Liquor License

Price set locally

RR On-Sale Full Service Restaurant Liquor License

Price set locally

HP On-Sale Hunting Preserve Liquor License 500.00April 12, 2012

Alcohol Licenses and Fees

Alcohol Licenses and FeesCod

e Description Cost

Manufacturer

Licenses

AD Artisan Distiller 500.00

FW Farm Winery 100.00

MB Malt Beverage Manufacturer - Brew Pub 500.00

Other Licens

es

CA Carrier License 100.00DA Dispenser Alcohol 10.00SA Solicitor Alcohol 25.00

TA Transporter Alcohol - wine and spirits 25.00Wholesale Licenses

WB Wholesaler Malt Beverage 400.00

WL Wholesaler Liquor 5,000.00

April 12, 2012

License Transfers

Licenses may be transferred to a new location or to another person for a fee of $150.00. License transfers require completion of a new application and take the same course and are acted upon as if they were an original application.

Transfer to another person:1. Licensee must complete an Affidavit for Transfer; and2. Licensee must be current on all taxes including sales/use tax,

unemployment insurance tax, and property tax.

April 12, 2012

Affidavit for Transfer available at www.state.sd.us/drr select Special Taxes, then Forms.

Taxes and Fees on AlcoholSDCL 35-5-2, 35-5-3

Malt beverages - $8.50 per barrel of 31 gallons

Light wine (3.2% – 14% alcohol by weight) and diluted beverages - $.93 per gallon

Wine (14% - 20% alcohol by weight) - $1.45 per gallon

Wine (20% - 24% alcohol by weight) and sparkling wines - $2.07 per gallon

Cider (up to 10% alcohol by weight) - $.28 per gallon

All other alcoholic beverages - $3.93 per gallon

April 12, 2012

An occupational tax is levied on the manufacturers and wholesalers on all alcoholic beverages purchased, received, or imported into South Dakota.

Markup Fee paid to Municipality SDCL 35-4-60.2

Applies to Malt Beverages

Certain municipalities may require the licensee to purchase, directly from the municipality, the malt beverages the licensee intends to sell.

• The municipality must be licensed pursuant to SDCL 35-4-2(5) and have an ordinance requiring such purchases be made from the municipality.

• The municipality may not charge the licensee more than 5% above cost, plus freight, unless the municipality has operating agreements in place and imposes a mark-up higher than 5%.

• The municipality must charge all licensees the same price for malt beverages.

April 12, 2012

Days and times for selling, serving, and consuming SDCL 35-4-81, 35-4-81.2

Malt beverage and wine retailers and package dealers may sell alcoholic beverages between the hours of 7:00 am and 2:00 am, 365 days per year.

All other licensees may sell alcoholic beverages between the hours of 7:00 am and 2:00 am, except:• Sunday and Memorial Day – no sales after 2:00 am• Christmas Day – no sales at anytime

A municipality or county may, by ordinance, allow the sale of alcoholic beverages on Sundays and Memorial Day.

A municipality or county may be more restrictive than the legal days and times shown above.

April 12, 2012

Age of Sellers and ServicersSDCL 35-4-79, 35-4-79.1Depends on Type of License A person must be at least 21 years old to sell, serve, or dispense alcoholic beverages except in the following circumstances:• On-sale licensees may permit persons 18 years old or older to sell and

serve alcoholic beverages if less than 50% of the gross business at that establishment is from the sale of alcohol and the licensee or an employee who is at least 21 years old is on the premises at the time of the sale.

• Off- sale licensees may permit persons 18 years old or older to sell alcoholic beverages if less than 50% of the gross business at that establishment is from the sale of alcoholic beverages. There is no requirement for the licensee or an employee who is at least 21 years old to be present at the time of the sale.

April 12, 2012

LoiteringSDCL 35-4-79

It is a Class 2 misdemeanor for an on-sale licensee to allow a person under 21 years of age to loiter on the licensed premises.

This violation is subject to 30 days imprisonment in a county jail or $500 fine, or both.

April 12, 2012

Purchaser Age RequirementsSDCL 35-9-1, 35-9-1.1

It is a Class 1 misdemeanor to sell or give for use any alcoholic beverage to any person under the age of 18 years, unless:

• It is done in the immediate presence of a parent or guardian or spouse over 21 years of age, while not on the licensee’s premises or at a special event for which an alcoholic beverage license has been issued; or

• It is done by prescription or direction of a duly licensed practitioner or nurse of the healing arts for medicinal purposes.

It is a Class 2 misdemeanor to sell or give for use any alcoholic beverage to any person who is 18 years old or older but less than 21 years of age, unless:

• It is done in the immediate presence of a parent or guardian or spouse over 21 years of age; or

• It is done by prescription or direction of a duly licensed practitioner or nurse of the healing arts for medicinal purposes.

April 12, 2012

The legal age to purchase and consume alcohol in South Dakota is 21 years.

Penalties for selling to underage buyerBusiness (Licensee)

SDCL 35-2-10.1 requires the Department of Revenue (DOR) to impose civil penalties on a business who has a clerk who sells alcohol to a minor.The penalties vary depending on the number of violations in the previous 24 months and whether the clerk who made the sale has been certified by a Department of Revenue (DOR) approved training program.

1st violation: $500.00 fine, if the clerk has participated in a DOR approved training program. $1000.00, if the clerk has not gone through training.

2nd violation in a 24 month period: $1000.00 fine, if the clerk has participated in a DOR approved training program. $2000.00, if the clerk has not gone through training.

3rd violation in a 24 month period: The business’ alcohol license will be suspended for 14 days.

April 12, 2012

Penalties for selling to underage buyerClerk • A clerk who sells or serves alcohol to a person under the age of 18 faces a

Class 1 misdemeanor. SDCL 35-9-1

• A clerk who sells or serves alcohol to a person between 18-21 years of age faces a Class 2 misdemeanor. SDCL 35-9-1.1

• In addition to possible jail time and fine: For the first offense, the clerk’s driver's license may be revoked for a minimum

of 30 days or up to a maximum of one year. For the second offense and subsequent offenses, the clerk’s driver's license

may be revoked for a minimum of 60 days or up to a maximum of one year. SDCL 35-9-7 and 35-9-8

Employers may also impose severe ramifications or termination for selling or providing alcoholic beverages to a person under 21 years of age.

April 12, 2012

Defense against penalties SDCL 35-9-1.2

The only defense is that the person made a reasonable attempt to investigate the age of the person by examining an age-bearing identification document that would have appeared valid to a reasonable and prudent person.

April 12, 2012

Penalties – Underage buyersSDCL 35-9-2, 35-9-7, 35-9-8

It is a Class 2 misdemeanor for any person under the age of 21 years to purchase, attempt to purchase, or possess or consume alcoholic beverages, or to misrepresent his or her age with the use of any document for the purpose of purchasing or attempting to purchase alcoholic beverages from any licensee licensed under this title.

Additionally, a person under the age of 21 may face suspension or revocation of driving privileges for purchasing, attempting to purchase, possession, or consumption of alcoholic beverages.

April 12, 2012

Where can alcohol be sold or served? The licensed premises is the legal description listed on the license application. It may include multiple lots as long as they are contiguous and are owned or leased by the licensee.It does not include streets, alleys, etc.

April 12, 2012

Paying for AlcoholARSD 64:75:08:01, 64:75:04:02

Customers charging alcohol purchases • There are no statutory rules or regulations addressing this issue.

Rules regarding licensee payment on delivery of alcohol • Malt Beverages – No wholesaler or brewer may advance money or

credit to the retailer. Sales or delivery must be made for cash only. Checks and electronic funds are acceptable.

• Other Alcoholic Beverages – Sales or delivery may be made by the wholesaler on terms requiring payment by the purchaser within 30 days.

April 12, 2012

.

Delivering AlcoholSDCL 35-4-74, 35-4-75

Delivery of alcoholic beverages by a retailer is prohibited. A violation is a Class 2 misdemeanor.• On-sale licensees may only serve alcoholic beverages on

the licensed premises. • Off-sale licensees may not make deliveries outside of the

licensed premises.

April 12, 2012

Free SamplesSDCL 35-4-10.2

Off-sale liquor licensees may provide free samples of alcoholic beverages they currently have in stock and for sale. The sample must be consumed on the licensed premises during legal hours of off-sale.

• Samples of malt beverage may be no larger than 3 ounces, • Samples of wine may be no larger than 50 milliliters, and • Samples of distilled spirits, liqueur, or cordials may be no larger than 25

milliliters.

• No more than 3 varieties of each type of alcoholic beverage may be offered each day and no more than 3 samples may be offeredto any individual.

April 12, 2012

Hospitality Rooms – Holiday Party Policy

The State of South Dakota has a "holiday party policy" which allows businesses (such as motels and hotels) to rent a room for a party to private individuals who furnish their own alcohol, ice and mixers. The hotel/motel or the person holding the party cannot sell the alcohol or charge a fee for attending.

April 12, 2012

Most Frequent Violations

• Sales to underage individuals – generally results in monetary penalty ranging from $500 - $2,000 for 1st and 2nd violations, 14 day suspension for 3rd violation, longer suspension or revocation for subsequent violations

• Sales after legal hours – generally results in 3 day suspension for 1st violation, longer suspension or revocation for subsequent violations

• Sales to obviously intoxicated individuals – generally results in 3 day suspension for 1st violation, longer suspension or revocation for subsequent violations

April 12, 2012

New legislationSB 62 – “Corkage Bill”This legislation allows an on-sale wine licensee to permit customers to bring in their own unopened bottle of wine for consumption while eating a meal that was prepared by the licensee. The licensee may charge a fee for serving the wine supplied by the customer.It also allows for the customer to carry out the unconsumed portion of the wine the customer brought in with them or purchased from the licensee. The licensee must securely reseal or re-cork the wine and place it in a sealed bag or container and attach the receipt for the meal, corkage fees, and/or wine to the bag or container.

SB 99 This legislation allows a judge to prohibit a licensee or employee of a licensee from entering onto the licensed premises if they have been charged with:• A crime of violence• A felony offense involving a minor• A felony drug related offense

April 12, 2012

TobaccoProducts definedTaxesRegistrationAge RequirementsPenaltiesVending MachinesTobacco PricesSmoking BanNew Legislation

April 12, 2012

Tobacco Products defined

SDCL 10-50-1(8)"Tobacco products," cigars, snuff, chewing tobacco, and any other products made up or composed of tobacco in whole or in part, except cigarettes.

SDCL 10-50B-4“Cigarette”, any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains any roll of tobacco wrapped in paper or in any substance not containing tobacco.

April 12, 2012

Taxes on Tobacco Products

SDCL 10-50-3 Cigarettes:• Packs of 20 = $1.53 per pack• Packs of 25 = $1.92 per pack

SDCL 10-50-61Other tobacco products at taxed at 35% of the wholesale purchase price of such tobacco products.

April 12, 2012

RegistrationSDCL 10-50-9• Distributors or wholesalers must obtain a license from DOR. The

application is available on the website and there is a $150 annual fee.

• Retailers must also register with DOR as a tobacco retailer. There is no fee for this registration, no extra taxes, and no extra filing or reporting requirements. This registration may be done in conjunction with your application for a sales tax license or on the special taxes web site.

April 12, 2012

Age requirementsPurchaser

SDCL 34-46-2• It is unlawful to purchase or attempt to purchase, to receive or

attempt to receive, to possess, or to consume a tobacco product if a person is under the age of eighteen.

SDCL 34-46-5• Class 2 misdemeanor: 30 days imprisonment in a county jail or

$500 fine, or both.

April 12, 2012

Age RequirementSeller

There are no statutory rules or regulations addressing the age of the clerk selling tobacco products.

SDCL 34-46-5Penalties for sale of tobacco products to underage individual.

Class 2 misdemeanor: 30 days imprisonment in a county jail or $500 fine, or both.

April 12, 2012

 VENDING MACHINES

SDCL 34-46-2(5)It is unlawful to sell tobacco products through a vending machine located in a place other than the following:

(A) A factory, business, office, or other place not open to the general public;

(B) A place that is open to the public but to which persons under the age of eighteen are denied access;

(C) An establishment licensed under chapter 35-4 to sell alcoholic beverages for consumption on the premises where sold

April 12, 2012

Tobacco prices

SDCL ch. 37-10 Minimum prices apply to cigarettes

To advertise, offer to sell, or sell, at retail or wholesale, cigarettes at less than cost is not allowed.

Cost to the retailer means the basic cost of cigarettes to the retailer plus the cost of doing business by the retailer.

The cost of doing business by the retailer is presumed to be 8% of the basic cost of cigarettes to the retailer, unless proof of a lesser or higher cost is provided to DOR.

April 12, 2012

Smoking Ban

SDCL 34-46-14, 34-46-18, and 34-46-19

It is a petty offense to smoke tobacco or carry any lighted tobacco product in any public place or place of employment. The smoking ban does not apply to private residences (unless used as a daycare) or to rooms posted as smoking rooms in any hotel or lodging establishment.

DOR is not the “smoking police”.

These issues are handled by local law enforcement.

April 12, 2012

Smoking Ban Exceptions1. Smoking of cigars and any premium tobacco product purchased on the

premises is allowed at certain licensed establishments where alcohol is sold if they were in compliance on January 1, 2009 and:• Generates 10% or more of its annual gross income from the sale of cigars;• Has a humidor on the premises; and• Is enclosed by solid walls or windows, a ceiling, and a solid door and is equipped with a

ventilation system by which exhausted air is not recirculated to nonsmoking areas and smoke is not back streamed into nonsmoking areas.

2. Smoking is also allowed in certain retail tobacco stores that meet the following requirements:• Generates 65% of its annual gross income from the sale of tobacco, tobacco products,

and accessories for such products;• Is enclosed by solid walls or windows, a ceiling, and a solid door that provides egress to

the outdoors; and• Does not allow the consumption of alcoholic beverages on the premises.

Establishments meeting these two exceptions must annually report to DOR the percentage of annual gross income from the sale of cigars or the sale

of tobacco, tobacco products, and accessories.

April 12, 2012

NEW LEGISLATION

HB 1138 Defines RYO establishments as cigarette manufactures for the purposes of SDCL chapter 10-50 (taxation, packaging, labeling, certification, reporting requirements, and record keeping), SDCL chapter 10-50B (escrow payments for non-participating manufacturers of the master settlement agreement), and SDCL chapter 34-49 (cigarette fire safety standards).

RYO establishments have until July 1, 2014 to meet the fire safety standards; the other provisions take effect July 1, 2012.

April 12, 2012

For sales and use tax information contact the Business Tax Division.

Call toll-free at 1-800-829-9188

Email the business tax division at: bustax@state.sd.us

Visit our Website: www.state.sd.us/drr Select Business Tax

April 12, 2012

Sales and Use Tax

April 12, 2012

Visit our Website: www.state.sd.us/drr

Call: 1-605-773-3311

Email the Special Tax Division: specialT@state.sd.us

Division of Special Taxes445 E Capitol AvePierre, SD 57501

Questions?

April 12, 2012