Alcoholic Beverage Control, Administration

Section R81-1-3

General Policies

Notice of Proposed Rule

(Amendment)

DAR File No.: 36271
Filed: 05/22/2012 01:49:17 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

Since at least 1999, the practice of the Department of Alcoholic Beverage Control (DABC) has been to impose a case handling markup on alcoholic beverages. With the passage of H.B. 354 (2012 General Session), and the creation in that bill of the Markup Holding Fund, it is necessary to codify this practice. A previous rule filing (DAR No. 36058) was published in the May 1, 2012, Utah State Bulletin. After that publication, the DABC received written comment from the Utah State Tax Commission, whose auditing team had reviewed the filing. The Tax Commission made recommendations to make the rule filing more consistent with their interpretation of H.B. 354. This filing reflects those recommendations. The DABC intends to allow DAR No. 36058 to lapse without making it effective.

Summary of the rule or change:

This rule codifies the practice of imposing a case handling markup. It allows flexibility within the DABC to ensure that the case handling markup generates revenues to match the actual appropriation the DABC receives for warehouse operations and costs to ship the product from the warehouse to retail stores.

State statutory or constitutional authorization for this rule:

• Section 32B-1-607
• Section 32B-2-202

Anticipated cost or savings to:

the state budget:

None--This rule codifies existing practice. The DABC will continue to manage the markup to ensure it generates revenue to the state equivalent to the relevant appropriations.

local governments:

None--Local governments are not involved in the sale or warehousing of alcoholic beverages.

small businesses:

None--This rule codifies existing practice. The DABC will continue to manage the markup to ensure it generates revenue to the state equivalent to the relevant appropriations. Manufacturers of alcoholic beverages will continue to see an across-the-board markup to all alcoholic beverages sold in Utah.

persons other than small businesses, businesses, or local governmental entities:

None--This rule codifies existing practice. The DABC will continue to manage the markup to ensure it generates revenue to the state equivalent to the relevant appropriations. Manufacturers of alcoholic beverages will continue to see an across-the-board markup to all alcoholic beverages sold in Utah.

Compliance costs for affected persons:

None--This rule codifies existing practice regarding the case handling markup. The DABC will continue to manage the markup to ensure it generates revenue to the state equivalent to the relevant appropriations. Manufacturers of alcoholic beverages will continue to see an across-the-board markup to all alcoholic beverages sold in Utah.

Comments by the department head on the fiscal impact the rule may have on businesses:

This rule change codifies what has been the practice for years. Utah's case handling markup is the lowest in the nation, and will remain that way for the foreseeable future. This filing will enable the DABC to continue to warehouse product in an efficient and transparent manner.

Francine Giani, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Alcoholic Beverage Control
Administration
1625 S 900 W
SALT LAKE CITY, UT 84104-1630

Direct questions regarding this rule to:

• Vickie Ashby at the above address, by phone at 801-977-6801, by FAX at 801-977-6889, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

07/16/2012

This rule may become effective on:

07/23/2012

Authorized by:

Francine Giani, Executive Director

R81. Alcoholic Beverage Control, Administration.

R81-1. Scope, Definitions, and General Provisions.

R81-1-3. General Policies.

(1) Labeling.

No licensee or permittee shall sell or deliver any alcoholic beverage in containers not marked, branded or labeled in conformity with regulations enacted by the agencies of the United States government pertaining to labeling and advertising.

(2) Manner of Paying Fees.

Payment of all fees for licenses, permits, certificates of approval, or renewals thereof, shall be made in legal tender of the United States of America, certified check, bank draft, cashier's check, United States post office money order, or personal check.

(3) Copy of Commission Rules.

Copies of the commission rules shall be available at the department's office, 1625 South 900 West, P. O. Box 30408, Salt Lake City, Utah 84130-0408 for an administrative cost of $20 per copy, or on the department's website at http://www.abc.utah.gov.

(4) Interest Assessment on Delinquent Accounts.

The department may assess the legal rate of interest provided in Sections 15-1-1 through -4 for any debt or obligation owed to the department by a licensee, permittee, package agent, or any other person.

(5) Returned Checks.

(a) The department will assess a $20 charge for any check payable to the department returned for the following reasons:

(i) insufficient funds;

(ii) refer to maker; or

(iii) account closed.

(b) Receipt of a check payable to the department which is returned by the bank for any of the reasons listed in Subsection (5)(a) may result in the immediate suspension of the license, permit, or operation of the package agency of the person tendering the check until legal tender of the United States of America, certified check, bank draft, cashier's check, or United States post office money order is received at the department offices, 1625 South 900 West, Salt Lake City, Utah, plus the $20 returned check charge. Failure to make good the returned check and pay the $20 returned check charge within thirty days after the license, permit, or operation of the package agency is suspended, is grounds for revocation of the license or permit, or termination of the package agency contract, and the forfeiture of the licensee's, permittee's, or package agent's bond.

(c) In addition to the remedies listed in Subsection (5)(b), the department may require that the licensee, permittee, or package agent transact business with the department on a "cash only" basis. The determination of when to put a licensee, permittee, or package agency operator on "cash only" basis and how long the licensee, permittee, or package agency operator remains on "cash only" basis shall be at the discretion of the department and shall be based on the following factors:

(i) dollar amount of the returned check(s);

(ii) the number of returned checks;

(iii) the length of time the licensee, permittee, or package agency operator has had a license, permit, or package agency with the department;

(iv) the time necessary to collect the returned check(s); and

(v) any other circumstances.

(d) A returned check received by the department from or on behalf of an applicant for or holder of a single event permit or temporary special event beer permit may, at the discretion of the department, require that the person or entity that applied for or held the permit be on "cash only" status for any future events requiring permits from the commission.

(e) In addition to the remedies listed in Subsections (5)(a), (b), (c) and (d), the department may pursue any legal remedies to effect collection of any returned check.

(6) Disposition of unsaleable merchandise.

The department, after determining that certain alcoholic products are distressed or unsaleable, but consumable, may make those alcoholic products available to the Utah Department of Public Safety for education or training purposes.

All merchandise made available to the Utah Department of Public Safety must be accounted for as directed by the Department of Alcoholic Beverage Control.

(7) Administrative Handling Fees.

(a) Pursuant to 32B-4-414(1)(b)a person, on a one-time basis, who moves the person's residence to this state from outside of this state may have or possess for personal consumption and not for sale or resale, liquor previously purchased outside the state and brought into this state during the move if the person obtains department approval before moving the liquor into the state, and the person pays the department a reasonable administrative handling fee as determined by the commission.

(b) Pursuant to 32B-4-414(1)(c) a person who as a beneficiary inherits as part of an estate liquor that is located outside the state, may have or possess the liquor and transport or cause the liquor to be transported into the state if the person obtains department approval before moving the liquor into the state, the person provides sufficient documentation to the department to establish the person's legal right to the liquor as a beneficiary, and the person pays the department a reasonable administrative handling fee as determined by the commission.

(c) The administrative handling fee to process any request for department approval referenced in subsections (7)(a) and (7)(b) is $20.00.

(8) Case Handling Markup

(a) For purposes of the landed case cost defined in Section 32B-2-304, "cost of the product" includes a case handling markup determined by the department.

(b) If a manufacturer and the Department have agreed to allow the manufacturer to ship an alcoholic beverage directly to a state store or package agency without being received and stored by the Department in the Department's warehouse, the manufacturer shall receive a credit equaling the case handling markup for the product that is not warehoused by the Department.

(c) The Department shall collect and remit the case handling markup as outlined in Utah Code Ann. Section 32B-2-304.

 

KEY: alcoholic beverages

Date of Enactment or Last Substantive Amendment: [March 1, ]2012

Notice of Continuation: May 10, 2011

Authorizing, and Implemented or Interpreted Law: 32B-2-201(10); 32B-2-202; 32B-3-203(3)(c); 32B-1-305; 32B-1-306; 32B-1-307; 32B-1-607; 32B-1-304(1)(a); 32B-6-702; 32B-6-805(3); 32B-9-204(4); 32B-4-414(1)(b) and (c)