Liquor Must Be Tallied for New U.S. Tax

While the rest of America is enjoying parades and football games on New Year’s Day, Alice Tauber expects to be, well . . . counting bottles.

“I’m freaking out,” she says with a smile, but there is a hint of panic as her eyes dart over the thousands of bottles in the liquor store she and her husband, Ed, have owned for 16 years.

All those bottles have to be counted so that the Taubers can figure how much they will have to pay to cover the new federal excise tax.

They won’t be alone. Everyone who sells alcoholic beverages or cigarettes--about 600,000 retail outlets and product producers, importers and wholesalers--must count every bottle and every pack as of Jan. 1, the day the tax goes up.

This is a one-time inventory. Usually, producers and importers pay all excise taxes. In fact, they have already paid the tax on everything now on the shelves, but at the old, lower rates. Retailers now must make up the difference between the old tax and the new one.

Once they complete the count and pay the appropriate tax, retailers such as the Taubers won’t have to worry about it again. After that, importers and producers will pay all the tax at the new rate and pass along the cost in higher wholesale prices.

The Taubers’ extensive Continental Liquors store in downtown Washington is closed New Year’s Day. This year, the Taubers, their 10 employees, their 22-year-old daughter and 21-year-old son will all be working, probably for about 11 hours.

“They’re dead if they don’t show up!” Alice Tauber said.

Completing the inventory forms and determining the amount of tax owed is not a job for the math-phobic.

Almost all liquor is bottled in metric measures, but Congress taxes by the gallon, as producers measure their output. And the tax on distilled spirits is based on so-called proof gallons--gallons that are 100 proof, or 50% alcohol.

So it’s not enough for the Taubers simply to count all the bottles of vodka in the store. The tax will differ for a 750-milliliter bottle of 80-proof vodka, a 750-milliliter bottle of 100-proof vodka and a liter of either strength.

An information packet from the Bureau of Alcohol, Tobacco and Firearms, which collects the tax, contains three pages of sample computations and a page of mind-bending conversion charts that require multiplication by such factors as 0.22915.

All this work should yield $300 million in revenue by the end of June, when the tax is due, ATF spokesman Jack Killorin said. But it will be a “challenge,” he said, for both the retailers and the ATF, which must check the accuracy of the inventories and amounts paid.

John B. Burcham Jr., executive director of the 10,000-member National Liquor Stores Assn., said the inventory comes at a bad time.

“Retailers are ending up the very busiest months--when it’s make or break for the whole year,” Burcham said. The tax “imposes a tremendous workload on retailers for which they get no return,” he said.

There are exceptions: Stores with less than 500 gallons in stock must take inventory but won’t have to make up the tax gap. The inventory will be easier for computerized stores, which the Taubers’ is not.

Ed Tauber couldn’t even estimate how many types of distilled spirits, wine and beer the store carried, much less how many bottles were on hand.

“Thousands, just thousands,” he said.

A count of the vodka stock revealed just how massive the job is, and the store has far more bottles of wine than of spirits.

There are 51 different vodkas, including 750-milliliter and 1-liter bottles of the same brands. There are eight choices of Stolichnaya alone, from the usual 80-proof and 100-proof bottles in two sizes each to the 90-proof Okhotnichya, flavored with mountain grass and heather honey.

Once the bottles are counted, Ed has to figure the appropriate new price for each type of liquor, wine and beer in the store.

The tax increases already are set: $1 per proof gallon of distilled spirits; 90 cents per gallon of wine (excluding sparkling wine); $9 per barrel of beer (at 31 gallons per barrel); $2 per 1,000 cigarettes.

Businesses have until Jan. 10 to count bottles as long as they keep records of just what they had in stock as of Jan. 1, 1991.

The Taubers hope to simplify matters by doing as much as possible on that day.

And, come Jan. 2, Alice Tauber said with a laugh: “Either I’ll be in the hospital or I’ll be drunk.”