June 30, 2025
STATE OF WISCONSIN
DEPARTMENT OF REVENUE
DIVISION OF ALCOHOL BEVERAGES
DRAFT RULE ORDER OF THE DEPARTMENT OF REVENUE
AND DIVISION OF ALCOHOL BEVERAGES
DRAFT RULE ORDER
The Wisconsin Department of Revenue proposes an order to repeal and recreate Tax 7 and Tax 8 relating to alcohol beverage regulation and taxation.
The statement of scope for this rule, SS 009-24, was approved by the Governor on January 18, 2024, published in Register No. 813A3 on February 19, 2024, and approved by the Secretary of Revenue on March 7, 2024. ANALYSIS
Statutes interpreted: chs. 125 and 139, Stats. Explanation of agency authority:
Section 125.03 (1) (a), Stats., provides statutory rule-making authority as follows: (a) The department, in furtherance of effective control, may promulgate rules consistent with this chapter and ch. 139. (a) The division may promulgate rules consistent with this chapter and ch. 139 to carry out the division's duties under this chapter. Section 139.08 (2), Stats, provides statutory rule-making authority as follows: (2) RULES. The secretary of revenue shall adopt rules necessary to carry out the secretary's duties under this chapter.
Section 227.11 (2), Stats., provides statutory rule-making authority as follows: a(a) "Each agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency, if the agency considers it necessary to effectuate the purpose of the statute...” c(c) "Each agency authorized to exercise discretion in deciding individual cases may formalize the general policies evolving from its decisions by promulgating the policies as rules …" Related statute or rule: There are no other applicable statutes or rules.
_Hlk24550024Plain language analysis: Structure: Under the current Wisconsin Administrative Code, Chapter Tax 7 contains all rules relating to the taxation and regulation of fermented malt beverages, and Chapter Tax 8 contains all rules relating to taxation and regulation of intoxicating liquor. This rule separates the taxation and regulation of all alcohol beverages, regardless of type, due to the regulation and enforcement of alcohol beverages under ch. 125, Stats, occurring under the newly created Division of Alcohol Beverages pursuant to 2023 Act 73. The recreated Chapter Tax 7 in this rule primarily relates to the regulation of alcohol beverages under ch. 125, Stats. and is promulgated and enforced by the Division of Alcohol Beverages. The recreated Chapter Tax 8 in this rule primarily relates to the taxation of alcohol beverages and is promulgated and enforced by the Division of Income, Sales and Excises Taxes within the Department of Revenue. Both recreated chapters generally follow the structure and flow of information found in chapters 125 and 139 of the Wisconsin Statutes. Removal of outdated and superseded rules: Several provisions of Tax 7 and 8 were outdated, superseded by 2023 Act 73, or redundant to rules or statute. Sections Tax 8.35, 8.61, and 8.66 have not been incorporated into this rule order. New rules relating to alcohol beverage regulation: The following provisions of Tax 7 are new:
Tax 7.01 Authority and Purpose cites the statutory authority for the chapter and outlines the responsibilities of the Division of Alcohol Beverages.
Tax 7.03 Background check fees describes the purpose for background checks for alcohol beverage permit applicants and which members of the applicant business are subject to criminal history checks. Authority for the Division of Alcohol Beverages to charge these fees was granted in s. 125.04(8m), Stats. Tax 7.035 Qualifications for and issuance of licenses and permits clarifies residency requirement and seller's permit requirements for purposes of determining qualified applicants for alcohol beverage licenses or permits under s. 125.04(5), confirms that the qualifications in s. 125.04(5) apply to related business entities of an applicant, describes the required information that must appear on a license certificate document issued by a municipality. Tax 7.04 Permits and fees outlines expiration dates and amounts of permit fees for all alcohol beverage permits issued by the Division of Alcohol Beverages and when an application fee may be refunded, and establishes standards for an allowable premises.
Tax 7.06 Responsible beverage server training course standards establishes requirements that alcohol beverage server training courses must meet to be approved. This codifies the department's long-standing guidance into administrative code. Tax 7.11 Operators' permits establishes the expiration date and application process for operator's permits issued by the Division of Alcohol Beverages.
Tax 7.12 Alcohol beverage warehouse standards establishes long-standing department practice for regulation of alcohol beverage warehouse permittees including who may hold the permit, authorized activities under the permit, and requirements of the premises.
Tax 7.13 Permissible interests provides definitions and processes necessary to administer s. 125.20, Stats, created in 2023 Wisconsin Act 73. Tax 7.14 Production agreements provides clarification for producers engaging in production agreements under s. 125.21, Stats., including requirements for disclosure of agreements to the Division of Alcohol Beverages and examples for tax payment and reporting requirements specifically relating to contract production agreements with out-of-state recipe suppliers. 7.15 Common carrier permit; shipments into state clarifies that common carrier permits may be issued to one entity for multiple locations and requires that the monthly report be filed electronically.
7.16 Fulfillment houses provides the expiration for fulfillment house permits, requires that monthly reports be filed electronically, and that a permit is required for each location where wine will be shipped into Wisconsin.
7.17 Full-service retail sales by producers creates a requirement for producers to apply for on-and off-premises sales approval from the Division of Alcohol Beverages, requires that applications be made 15 days prior to desired commencement of full-service retail sales, explains how production volumes will be calculated and verified, provides guidance on when during the year a producer may apply for full-service retail sales, and provides several examples of how cumulative production volume is calculated if a legal business entity is merged, acquired, reorganized, or restructured. The section also creates a revocation, suspension, and refusal to renew process for these privileges, and creates invoice and recordkeeping requirements.
7.19 Returns of alcohol beverages codifies long-standing department guidance allowing retailers to make refunds to consumers, but not returns of the alcohol beverages. The rule also prohibits retailers from returning alcohol beverages from producers, distributors, and out-of-state shippers. The rule allows producers, distributors, and out-of-state shippers to replace alcohol beverages sold to retailers that were expired, spoiled, or recalled with identical brand, flavor, quantity, and size as long as the transaction is documented. 7.20 Retail premises codifies long-standing department guidance that specifies that a premises is fixed location describing land and buildings, that the licensee must have complete control over that premises, and that two premises separated by floor-to-ceiling walls, each with separate entrances, are not connecting premises. 7.21 Possession with intent to sell clarifies that alcohol beverages kept on a licensed or permitted premises is evidence that the products are kept with intent to sell and if a license or permit is invalid for any reason all alcohol beverages on the previously licensed or permitted premises must be removed from public exposure for sale.
7.22 No-sale event venue permits clarifies that the definition of "rent" or "lease," in s. 125.09(1) and 125.24, Wis. Stats. requires consideration in any form in exchange for use of real property, requires no-sale event venue permit applicants to use the form prescribed by the department to apply for the permit, and outlines the required documentation for purposes of qualifying for the qualifying event venue certification. Tax 7.32 Out-of-state shippers of fermented malt beverages clarifies that a wholesaler in another state that holds a federal basic importers permit is eligible to obtain an out-of-state shipper permit.
New rules relating to alcohol beverage taxation: The following provisions of Chapter Tax 8 are new:
8.01 Authority and purpose cites statutory authority for the chapter and outlines the responsibility of the Department of Revenue.
8.08 Contract production explains when an out-of-state recipe supplier is responsible for reporting and paying Wisconsin excise tax as a party to a contract production agreement.
8.09 Transfers of alcohol beverages between production premises and full-service retail outlet confirms that alcohol beverages removed from the production premises for transfer to a full-service retail outlet is a removal for consumption or sale and Wisconsin excise tax is imposed.
Amended existing rules: Attached is a comparison chart of the changes the division and department have made to existing provisions of Tax 7 and 8.
Summary of, and comparison with, existing or proposed federal regulation: Federal regulations and administrative provisions allow alternating proprietorships and contract manufacturing of fermented malt beverages and intoxicating liquor. See federal TTB Industry Circulars 2005-2, 2008-4, 2018-3 for more information. For alternating proprietorships, the federal Alcohol and Tobacco Tax and Trade Bureau (TTB) requires all entities sharing a premises to be properly permitted. The host and tenant producers each hold title to their own ingredients and pay tax on their own products when removed from the bonded area.
For contract production purposes, federal regulations provide that only the production brewer is required to hold a permit and the production brewer holds title to the ingredients and pays the tax on the product produced under the agreement. In contrast, s. 125.21 (3) (b) and (e), Stats., requires both the production and recipe brewers to hold state-issued permits, and the recipe brewer is responsible for reporting and paying tax on the alcohol beverages produced under the agreement. 2023 Wisconsin Act 73 legalized alternating proprietorships and authorized contract production agreements for all types of alcohol beverage production. Wisconsin law is consistent with federal regulations relating to alternating proprietorships. However, contract production agreements have different reporting and regulatory requirements than federal law; specifically Wisconsin law reflects the tax, reporting, and regulatory responsibilities that previously existed for brewers in s. Tax 7.23, Wis. Adm. Code. This rule order repeals s. Tax 7.23, Wis. Adm. Code, because contract production requirements are specified in s. 125.21, Stats. Federal labeling requirements for intoxicating liquor and fermented malt beverages are found in 27 CFR parts 4, 5, 7, 24, and 25. These sections of the federal code outline what products must be labelled and what information must appear on the alcohol beverage container and packaging. The department has referenced federal code sections for labeling requirements since 1978, in existing ss. Tax 7.21 and 8.52(2), Wis. Adm. Code. The rule order adds the specific federal code reference for distilled spirits. Federal standards of fill are established in 27 CFR parts 4 and 5 and governs the amount of liquid that is placed in the bottle, can, or other vessel used to hold the alcohol beverage. Federal labelling requirements and standards of fill are adopted by reference in Tax 7.07 and Tax 7.41 of this rule order.
The adoption of federal standards of fill and labelling standards by reference was approved by the Attorney General on June 20, 2025.
