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In our continuing series of looking at compliant direct shipping, we review the topic of auditability and accountability, perhaps the least understood and yet most important consideration for regulators in local, state, and federal government.

Auditability is one of four focus areas for regulators. Others include Age-verification, Licensing and Compliance, and Taxes (ALTA).

Regulating the direct shipping of alcoholic beverages within and across state lines is highly complex and includes 3,800+ individual tax rates across local, state, and federal jurisdictions and more than 2.6 million zip codes across the U.S. Furthermore, many states handle age verification differently, range widely in their reporting requirements and have inconsistent rules for the common carriers who deliver packages containing alcohol.

It is critical that government regulators have the tools and data to know whether producers and shippers of beverages are properly licensed and paying the correct taxes. The good news is that a strong, integrated e-commerce platform will provide an audit trail of all transactions and end-to-end tracking of packages, including:

  1. Some states including Maryland, Michigan, Indiana, South Dakota, and others require electronic age verification pre-purchase and a record be kept that this has taken. The consumer simply acknowledging their age or entering a date of birth does not meet this requirement.
  2. Many states require common carriers to report tracking numbers, shipper accounts, and ship from addresses for alcohol related shipments. It is becoming increasingly common for more sophisticated states such as New Hampshire to use matching technology to compare what ships on a permit and is reported versus the manifests supplied by the carriers. Having all this data to report in one place is crucial.
  3. The modern economy and online sales are the most auditable processes today. Comprehensive systems capture all the details from pre-purchase, purchase, shipping, and delivery.
  4. It is now possible to capture all sales tax using the nine-digit zip code for addresses. Having that data sitting in a single system that can be submitted directly to the applicable state removes all double-entry of data, ensures it is fully traceable, and removes the possibility of human error.
  5. With all data being held electronically in one place, it makes the job of an auditor much easier. They can request copies of electronic transaction files and thus obtain savings from reduced travel time and reviewing copious amounts of paperwork.
  6. The benefit to the seller is equally huge, they do not have to spend weeks gathering information from multiple places; they know their data is all in one place and easy to access. With the right supporting vendor, the information can be supplied quickly for an audit.

Vinoshipper has identified the key requirements for states, that is Age Verification, Licensing, Tax Collection, and Auditability of transactions (ALTA). Transparency and accountability are paramount for regulators to track compliance and ensure that businesses involved in direct shipping are following the complex maze of state, local, and federal laws that intend to keep communities safe. Vinoshipper is proud to lead the way with a single solution that helps producers and regulators work together to modernize our industry.

Original LinkedIn Article