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U.S. Offers Wineries Post-Quake Tax Breaks

Solano County vintners shaken but unscathed in California earthquake

by Jane Firstenfeld
Julie DeNapoli’s Julie LePla Winery in Winters, Calif., survived the Aug. 24 earthquake intact. “All the wine was in barrels,” DeNapoli said.
Washington, D.C.—On Aug. 29, the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) issued answers to frequently asked questions for vintners and allied businesses affected by the magnitude-6.0 earthquake felt throughout the Bay Area five days earlier.

The quake, which has been followed by a succession of aftershocks, caused damages in the Napa County, Calif., area estimated from $50 million to more than $1 billion—including widespread structural damages, loss of equipment and loss of wine in tanks, barrels and bottles.

TTB does not address structural or equipment damage, but its regulations do permit the agency to authorize excise tax relief in the form of refunds or credits for wine losses. Under the emergency provisions, reporting deadlines may also be waived. Retailers, wholesalers and importers may also request refunds for federal excise taxes paid for lost or condemned alcoholic beverages.

Although normal regulations require proprietors to report casualty losses immediately, “Due to the extent of damage caused by the Aug. 24 earthquake,” the agency has waived that requirement. “Proprietors should instead report their losses as soon as they are able to determine the extent of the damage to their inventories,” the TTB statement read.

In normal circumstances, owners must request TTB permission to destroy wine that is “condemned” for safety reasons. This requirement is also waived. “However, proprietors must still submit a notification as soon as is practical….Please note that the wine must be destroyed in compliance with your local environmental and waste-disposal rules,” TTB cautioned.

Transferring bonded wine to another bonded location for safekeeping and later transferred back to your winery, TTB said, “will not affect your ability to take the small-producer credit,” which is limited to 250,000 gallons produced per year. Only wine produced by your winery is eligible.

For more detailed information and links to necessary forms, click here.

Solano wineries survive
The quake’s epicenter was determined to be a remote marina in southern Napa County, very near the border with Sonoma County in the Carneros District. Solano County is just south and east, bordering American Canyon, Calif.

Vallejo, Solano County’s largest city, felt the violent shock. More than 20 structures (mostly in the Victorian historic district) were severely damaged and red-tagged—including the main post office, now closed indefinitely for broken windows and asbestos contamination.

Solano wraps around the east side of Napa County, extending north to Dixon, which is adjacent to the University of California, Davis. Currently, Solano County is home to 13 small, bonded wineries.

Most of the county’s wineries reported having minimal damage to winery facilities or tasting rooms. In fact, the wineries celebrated their annual Harvest Festival mere hours after the Aug. 24 temblor.

Doug Sparks founded 1,500-case Sunset Cellars in Suisun Valley in 1997, but he lives in San Francisco, where he was awakened at 3:20 a.m. by the quake.

“I drove in very nervous,” Sparks told Wines & Vines. He first went to his shed, to pick up some brooms. Although a few display bottles behind the tasting bars had crashed, he asked himself “Am I missing something?”

Sparks tidied up and opened for the Harvest Celebration. Although he fielded a few calls from nervous visitors, and received a slightly smaller number than the previous year, Sunset Cellars hosted more than 200 guests from all over the Bay Area. “I’d offered a few deep discounts, and it was a good sales day,” Sparks reported.

Vicke McKeown, general manager of G V Cellars in Fairfield, reported, “We were very fortunate.” The winery produces some 22,000 cases annually, including custom crush.

She walked in to see “a few leaning towers of cases,” but, she said, barrels were all intact and nothing broke, although “a tiny bit of wine” leaked from the winery’s 12,500-gallon tanks.

“Fortunately, there was no one at the winery,” McKeown said. Although technically outside the Suisun Valley, G V participated in its harvest event, drawing about 160 visitors.

“If we’d had wine in fermentors,” she commented, “it would have been a mess.”

At 1,200 cases, Jess Jones Vineyard in Dixon reported no damage. In fact, the winery hosted a wedding less than 12 hours after the shake without a hitch, Mary Ellen Jones told Wines & Vines.

Crush was completed Aug. 10 at tiny, 100-case Julie LePla Winery in Winters, Calif., said owner Julie DeNapoli. Although she received concerned text messages from Southern California, she reported that the quake only sloshed water out of the swimming pool. “All the wine was in barrels,” she said.

At 10,000-case Wooden Valley Winery in Fairfield, founded in 1932, paperwork fell from office shelves, but otherwise, there were no problems, according to tasting room staffer Matt Nolan. Like the neighbor wineries, Wooden Valley enjoyed a busy Harvest Festival on Aug. 24.

Winterhawk Winery/Rio Vista Wine & Spirits in Fairfield was not open for business Aug. 24, but owner Donald Johnson said that aside from a single bottle that “flew off the shelf,” the winery suffered no damages.

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