Maine’s highest court has served a stiff reality check to the maker of Tito’s Handmade Vodka, ruling the company must pay $749,000 in unpaid taxes and fees.
This case has been winding through the court system since 2018 and has been appealed several times.
Fifth Generation, the Texas-based maker of Tito’s Vodka, unsuccessfully claimed that because the company doesn’t have a physical location in Maine, it shouldn’t be taxed.
The Maine Supreme Judicial Court held that Fifth Generation was required to pay Maine income taxes on its sales from 2011-17 because it had a sufficient tax presence with the state since it owned inventory stored in a Maine warehouse and completed sales within the state under Maine’s regulated liquor distribution system.
The court rejected the company’s argument that it was exempt under federal law, explaining that the company did more than just solicit orders, it actually stored products and carried out sales activities inside Maine, which counts as doing business in the state.
The court also upheld Maine’s regulatory system as constitutional and ruled that penalties were properly imposed because the company lacked strong legal justification for not paying the taxes.