Court Orders Tito’s Vodka Maker to Pay $749K in Maine Taxes and Fines
The Maine Supreme Judicial Court has mandated that Fifth Generation Inc., the Texas-based company behind Tito’s Vodka, pay $749,000 in taxes, interest, and penalties. This ruling arises from the company’s failure to file necessary tax returns for thousands of vodka cases sold in Maine between 2011 and 2017.
Details of the Court Ruling
The decision, issued Thursday, was a 4-1 ruling that upheld a judgment from Kennebec County Superior Court. This judgment favored the state’s tax assessment against Fifth Generation. The court also overturned a previous ruling by the Maine Board of Tax Appeals, which had favored the vodka manufacturer.
Background of the Case
The case originated when Maine Revenue Services began an audit of Fifth Generation in 2018. The audit revealed that the company had not complied with the state’s requirements for filing pass-through-entity withholding returns. According to Maine law, partnerships and corporations that earn income sourced from Maine must file tax returns for non-resident members or shareholders.
Documents from the court indicated that Fifth Generation supplied an increasing volume of vodka to Maine over the years. Starting with approximately 5.5 cases in 2011, the company escalated its sales to a total of 6,582 cases by 2017.
Company Operations in Maine
- Audit Period: 2011 – 2017
- Initial Sales: 5.5 cases in 2011
- Peak Sales: 6,582 cases in 2017
Despite the volume of sales, Fifth Generation did not establish real estate in Maine nor presented itself as conducting business there during the audit period. The court acknowledged that the company had at least two employees who traveled to Maine each year for sales-related activities, but they were based outside of the state.
Implications of the Ruling
This ruling has significant financial implications for Fifth Generation. The company must now address its tax obligations in Maine. This case underscores the importance of adhering to state tax regulations, regardless of the company’s physical presence or established business model in that state.
