By Peter A. Berdon, Esq.
Community package stores and other industry members are often called upon to help organize and donate to charitable tasting events. Knowing the rules and regulations concerning charitable tastings and donations will ensure that retailers, and wholesalers remain compliant with the law, and avoid putting the charity in a possibly embarrassing situation.
1. Who can sell beverage alcohol to a “charity”?
The answer depends upon what, if any, permit the charity holds. Generally speaking, organizations seeking to hold a tasting will either have a “temporary permit” or no permit at all. Holders of temporary permits may purchase alcohol products only from a licensed package store, not a wholesaler. See the Connecticut General Statute (CGS) § 30-76a. If the charity does not hold any license at all, it cannot purchase or sell alcohol products. Of course, should the charity hold a permanent retail permit, then it can only purchase alcohol products from a licensed wholesaler.
2. Can an industry member donate or give beverage alcohol to a “charity”?
Yes, Regulation 30-6-A41(b) provides: “Notwithstanding the provisions of this section or any other section of these regulations to the contrary, any permittee may donate alcoholic liquor to any bona fide non-profit or charitable organization to benefit and support such organization, provided prior notice of any such donations is given to the department.” “Charitable institutions” are defined by CGS § 30-1(7) as “any nonprofit organization organized for charitable purposes to which has been issued a ruling by the Internal Revenue Service classifying it as an exempt organization under Section 501(c)(3) of the Internal Revenue Code.”
It is important to note that “any bona fide non-profit” may also receive donations of alcoholic products. While the statutes and the regulations do not define “any bona fide non-profit,” it would seem to extend beyond merely organizations that are tax exempt under Section 501(c)(3) of the Internal Revenue Code. If there is any question as to whether or not an organization qualifies as “any bona fide non-profit,” one should ask the Liquor Control Division for guidance. If you do make a contribution, make sure to obtain a “gift letter” directly from the charity acknowledging the donation, the quantity of items provided and the value of the items.
3. How can I determine/verify if an organization is tax exempt under Section 501(c)(3) of the Internal Revenue Code?
You can visit the IRS web site to search if the organization is tax exempt and under which section of the code it is exempt. The link is: http://www.irs.gov/app/pub-78/ Please note many types of organizations are tax exempt under Section 501(c) of the Code, but not all pursue charitable endeavors.
4. How can a “charity” hold a tasting event?
There are three provisions under the Liquor Control Act/Regulations that permit a charity to hold a “tasting.” Regulation 30-6-B21a allows a “charitable organization” (that is an organization that is tax exempt under Section 501(c)(3) of the Code) to host a tasting sponsored by a permittee upon prior written approval by the Department of Consumer Protection. Alternatively, a charity may obtain a “one day” permit (also referred to as a “Temporary Permit”) under either CGS § 30-35 or 30-37b. Note should be made that the Liquor Control Act contains several provisions for liquor permits to be held by “non-profit organizations” on a permanent basis. This article does not address those permits.
5. What are the requirements for a “charity tasting” under Regulation 30-6-B21a(b)?
The requirements are:
- The tasting must be for a “charitable organization.” A “charitable organization” under the regulation’s tasting provision is more restrictive than that under the temporary permit section; being limited to only those organizations “organized for charitable purposes to which has been issued a ruling by the Internal Revenue Service classifying it as an exempt organization under Sec. 501(c)(3) of the Internal Revenue Code.”
- The event, if sponsored by a package store, may not occur in a package store, but a restaurant or café is a permitted location; but in either case requires prior written approval from the Department of Consumer Protection. Tastings for a charitable organization and sponsored by any non-package store permittee shall be allowed on or off the permit premises, and only with prior written approval from the department.
- The request for approval must be submitted to DCP at least 10 days prior to the event. The 10 day notice may be waived by the DCP for good cause.
- A package store may charge for the tasting, not to exceed the cost of the alcoholic beverages provided.
- A wholesaler or out-of-state shipper may assist in the planning, promoting, and conducting of tastings for charitable organizations.
- No tastings shall be offered to or allowed to be consumed by any minor or intoxicated person.
- An industry member may: (A) donate alcoholic products for the tasting; (B) provide free merchandise; (C) may make cash donations in support of the event; (D) lend employees to assist in the event; and (E) provide a representative to discuss the products being served.
6. What are the requirements for a charity tasting under CGS §§ 30-35 or 30-37b?
In order to host a tasting under either of these statutory sections, the sponsoring organization must obtain a permit from the Department of Consumer Protection. Section 30-35 of the Connecticut General Statutes provides that a charitable organization may obtain a temporary permit to sell alcoholic products at an outing, picnic or social gathering. A Charitable Organization permit issued under Section 30-37b differs slightly in that it permits the charity to sell drinks on the property owned by the charity. It is a daily permit. The number of permits the charity can receive is limited to 6 and 8 respectively.
7. How does an organization obtain a “temporary permit” under CGS §§ 30-35 or 30-37b?
The charity must apply to the Department for the permit. The instructions and application are available on the Department’s website. The link is here.
The foregoing is intended as general information only and not as legal advice. Contact an attorney to get advice about your particular circumstances.
Peter A. Berdon: Attorney Berdon, a partner with Berdon, Young & Margolis, PC, has represented wholesalers, manufacturers, package stores, restaurants and bars before the State of Connecticut DCP and the Federal TTB as well as in litigation matters in court since being admitted to practice in 1991. He can be reached at firstname.lastname@example.org www.bymlaw.com