Fifth Generation Inc., the Texas-based maker of Tito’s Vodka, must pay $749,000 in state taxes, interest and penalties because it failed to file required tax returns on thousands of cases of vodka sold in Maine, the state’s high court has decided.
“Fifth Generation supplied a steadily increasing number of cases of vodka to Maine, starting with roughly five and a half cases in 2011 and ending with 6,582 cases in 2017,” according to a Maine Supreme Judicial Court decision issued Thursday.
The high court ruled 4-1 to uphold a Kennebec County Superior Court’s 2024 judgment in favor of the state’s tax assessment, the decision states. It also vacated an earlier decision by the Maine Board of Tax Appeals that favored the company.
In 2018, Maine Revenue Services initiated an audit of Fifth Generation’s operations in the state and formally demanded that the company file a pass-through-entity withholding return for each year from 2011-2017, according to the decision.
Under Maine law, certain partnerships and corporations with Maine-source income must file pass-through-entity withholding or income tax returns for any members or shareholders who aren’t Maine residents.
“Fifth Generation had no real estate in Maine and did not hold itself out to the public as conducting business in Maine during the audit period,” the justices found. “It had at least two employees, based outside of the state, who visited Maine on sales-related trips each year.”
Yet the company “never filed a Maine pass-through-entity withholding return or a Maine income tax return,” the decision states.
