A New World of Alcohol Taxation in Texas

31 October 2013 Publication

Law360

If a consumer walks into a restaurant and orders a beer or wine, will the consumer be required to pay tax on that beer or wine?

Admittedly, it’s a bit of a trick question. Studies have shown most consumers believe that they do. The correct answer though is “maybe so, maybe not,” as it depends on the type of Texas Alcoholic Beverage Commission permit the restaurant holds. Starting in 2014, this will change and the overwhelming odds suggest the answer to the question is “yes.”

Today, if you walk into a hotel, restaurant, bar or other similar venue that holds a mixed-beverage permit from the TABC and order an alcoholic drink, you are not paying taxes on that drink. The reason for this is that the current mixed-beverage gross receipts tax is effectively an excise tax paid by the holder of the TABC permit selling you that drink.

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