(2017 Wisconsin Act 95, create secs. 125.26(2x), 125.27(4), 125.51(3)(bx) and 125.51(5)(e), effective December 02, 2017)

The issue is the actual volume of a product containing alcohol that is subject to Wisconsin's occupational tax imposed on selling intoxicating liquor provided in sec. 139.03(2m), Wis. Stats.

Arty's is a permitted Wisconsin rectifier of intoxicating liquor. The rectifier purchases distilled spirits, mixing them with soda, water and flavoring ingredients to produce and bottle pre-mixed cocktails. Arty's contends that the liquor tax on each bottle could be collected only on the volume of distilled spirits in each bottle (1.2 ounces), rather than the full volume contained in each bottle (7 ounces). The department's position is that the entire amount of Arty's premixed alcohol beverage is subject to tax.

Section 139.03(2m), Wis. Stats., imposes an occupational tax of 85.86 cents per liter on "intoxicating liquor," defined in sec. 139.01(3), Wis. Stats., to include "…all ardent, spirituous, distilled or vinous liquors, liquids, or compounds, whether medicated proprietary, patented, or not, and by whatever name called, containing one-half of one percent or more alcohol by volume, which are fit for beverage purposes, but does not include fermented malt beverages..."

The Tax Appeals Commission (TAC) found that because the final product contained in the bottles sold by Arty's is an intoxicating liquor, the full volume of the bottle is subject to the liquor tax. The Circuit Court agreed with the decision of the TAC and affirmed its findings.

The taxpayer has appealed this decision.

August 9, 2018