Why this matters for fleets and owner-operators
Two developments in the tax world carry practical implications for trucking: South Carolina’s clarified expectations for wine excise tax filers, and renewed emphasis by the IRS and the Tax Court on the “bank deposits” method to reconstruct income. If you haul beverage alcohol, run a 3PL/warehouse arm, or operate as a cash-heavy small business, both items touch your compliance risk and recordkeeping practices.
South Carolina’s wine excise framework—key points for carriers and 3PLs
South Carolina’s Department of Revenue (SCDOR) outlines that the wine excise tax is imposed on “the first sale” in the state and generally falls on licensed wholesalers. Monthly wine wholesaler excise returns are due within 20 days after month-end, and out-of-state direct shippers have separate filing obligations. SCDOR specifies rates of $0.90 per gallon (or $0.2535 per liter) and requires electronic filing via MyDORWAY. Invoices for shipments into the state must show quantity, brand, size, point of origin, and destination, and importers must file required reports electronically.
Why should a motor carrier care? Many carriers provide value-added services beyond transportation—cross-docking, storage, even related-party wholesale activity. If a trucking affiliate (or a logistics subsidiary) takes title to product or otherwise meets the “first sale” definition, the excise liability and monthly filing duty may sit with your enterprise, not your shipper. South Carolina’s alcohol licensing pages also stress three-tier structures, wholesaler designations, and brand/label approvals—controls that logistics operators entering distribution roles must navigate.
Practical compliance steps if you move beverage alcohol
- Confirm your role in the transaction flow. If your entity ever takes title or resells, assess whether you are the “first sale” party subject to South Carolina’s wine excise and monthly filing.
- Tighten documentation. Capture complete shipment invoices (brand, quantity, size, origin/destination) and retain carrier bills of lading aligned to importer/wholesaler reports.
- Validate permits. Ensure any producer/importer/wholesaler licenses and designated wholesalers are current before accepting distribution work.
- Calendar the deadlines. Wine excise returns are due within 20 days after month-end; late filings can trigger penalties and interest.
IRS bank deposits method: the audit tool small trucking businesses keep seeing
Separately, recent Tax Court decisions continue to uphold the IRS’s use of the bank deposits method when taxpayer records are incomplete. Under this method, examiners total deposits across all accounts and, after adjusting for nontaxable items (such as inter-account transfers, loans, gifts), treat the balance as taxable receipts. The IRS’s Internal Revenue Manual explains when and how agents apply this technique, and professional literature highlights cases where the court sustained the IRS’s reconstruction when the taxpayer failed to substantiate nontaxable sources.
For owner-operators and small fleets—especially those mixing personal and business banking—this matters. If your gross deposits materially exceed reported income and you can’t document nontaxable sources, the IRS can propose significant unreported income. Courts generally won’t throw out a bank deposits analysis because of a few mistakes if the overall approach is reasonable and the taxpayer’s books are lacking.
Action checklist for truckers before year-end
- Segregate accounts. Keep business and personal deposits separate; avoid using personal accounts for freight receipts. The IRM notes agents compare deposits across all accounts and look for unusual patterns.
- Map deposits to source. Maintain a simple schedule that ties each deposit to invoices, settlements, fuel card reimbursements, inter-account transfers, loans, or owner contributions so you can prove nontaxable items.
- Reconcile monthly. Match dispatcher/ELD trip logs and broker settlement statements to bank activity; resolve any gaps immediately.
- Document alcohol-related work. If you haul or distribute wine or other alcohol in South Carolina, confirm whether you or your shipper is the taxpayer for excise purposes; if it’s you, enroll in MyDORWAY and set recurring reminders.
- Talk to your advisor. Ask about reasonable compensation, per diem (if applicable), and mileage vs. actual expense strategies—and how those interact with deposit patterns in an audit.
Bottom line: If you’re expanding into distribution or warehouse services around beverage alcohol, South Carolina’s excise rules make your paperwork—and your role in the “first sale”—decisive. And regardless of your freight niche, clean banking and deposit documentation are the best defense against an IRS bank deposits analysis.
Sources Consulted: Tax Notes; South Carolina Department of Revenue; IRS Internal Revenue Manual; Journal of Accountancy.
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This article was prepared exclusively for truckstopinsider.com. For professional tax advice, consult a qualified professional.
