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The Credit Law section of the Audit and Investigations Division is responsible for generating the Credit Law Delinquent List, as required by Section 102.32 of the Alcoholic Beverage Code and Chapter 45.121 of the TABC Rules. "Credit Law" applies to the terms under which liquor (distilled spirits, wine, & malt liquor) is sold from an authorized upper tier member to a retailer. Authorized upper tier members may include wholesalers, wineries, breweries that hold self-distribution permits (DA), qualified brewpubs, and package stores that hold local distributors permits (LP). For purposes of credit law, wineries are considered retailers when purchasing wine under credit terms from wholesalers.
(a) In this section:
(1) "Wholesale dealer" means a wholesaler, class B wholesaler, winery, wine bottler, or local distributor's permittee.
(2) "Retailer" means a package store, wine only package store, wine and beer retailer's, wine and beer retailer's off-premise, or mixed beverage permittee, any other retailer, or a private club registration permittee. For purposes of this section, the holder of a winery permit issued under Chapter 16 is a retailer when the winery permit holder purchases wine from the holder of a wholesaler's permit issued under Chapter 19 for resale to ultimate consumers in unbroken packages.
(3) "Month" means a calendar month.
(b) No wholesale dealer may sell and no retailer may purchase liquor except for cash or on terms requiring payment by the retailer in accordance with Subsection (c) of this section.
(b-1) A wholesale dealer who accepts a check or draft as payment from a retailer for the purchase of liquor must deposit the check or draft in the back for payment or present the check or draft for payment within five business days after it is received.
(c) On purchases made from the 1st through 15th day of a month, payment must be made on or before the 25th day of that month. On purchases made on the 16th through the last day of a month, payment must be made on or before the 10th day of the following month. An account is not delinquent if payment is received by the wholesale dealer not later than the fourth business day after the date payment is due under this subsection.
(d) Each delivery of liquor shall be accompanied by an invoice giving the date of purchase. If a retailer becomes delinquent in the payment of an account for liquor, the wholesale dealer immediately shall report that fact in writing, including by electronic mail or facsimile transmission, to the commission or administrator. A wholesale dealer may not sell any liquor to a retailer who is delinquent until the delinquent account is paid in full and cleared from the records of the commission. An account becomes delinquent if it is not paid when it is required to be paid under Subsection (c).
(d-1) The commission or administrator may not accept the voluntary cancellation or suspension of a permit or allow a permit to be renewed or transferred if the permit holder is delinquent in the payment of an account for liquor under this section. A person whose permit is canceled by the commission or whose permit has expired is not eligible to hold any other permit or license under this code until the person has cured any delinquency of the permit under this section.
(e) A wholesale dealer who accepts a postdated check, a note or memorandum, or participates in a scheme to assist a retailer in the violation of this section commits an offense.
(f) The commission shall adopt rules and regulations to give effect to this section.
(a) Purpose. This section implements §§102.32, 11.61(b)(2), 11.66, and 109.64 of the Texas Alcoholic Beverage Code (Code).
(b) Definitions. For purposes of this section, the following terms have the definitions given in this subsection.
(1) Alcoholic beverage--As used in this section includes only liquor, as that term is defined in §1.04 of the Code.
(2) Cash equivalent--A financial transaction or instrument that is not conditioned on the availability of funds upon presentment, including, money order, cashier's check, certified check or completed electronic funds transfer.
(3) Delinquent payment--A financial transaction or instrument that fails to provide payment in full or is returned to the Seller as unpaid for any reason, on or before the fourth business day after the date that payment is due under §102.32(c) of the Code, or is returned to the Seller as unpaid for any reason after the fourth business day after the date payment is due under §102.32(c) of the Code. A delinquent payment also occurs in the event the Retailer fails to submit payment on or before the fourth business day after the date that payment is due under §102.32(c) of the Code.
(4) Event--A financial transaction or instrument that fails to provide payment to a Retailer and results in a Retailer making one or more delinquent payments to one or more Sellers.
(5) Incident--A single delinquent payment. Failure to submit payment also constitutes an incident.
(6) Retailer--A package store permittee, wine only package store permittee, private club permittee, private club exemption certificate permittee, mixed beverage permittee, or other Retailer, and their agents, servants and employees. For purposes of this section, the holder of a winery permit issued under Chapter 16 of the Code is a Retailer when the winery permit holder purchases wine from the holder of a wholesaler's permit issued under Chapter 19 of the Code for resale to ultimate consumers in unbroken packages. For purposes of this section and pursuant to Code §109.64, the holder of an industrial permit under Chapter 38 of the Code is treated in the same manner as a Retailer when the industrial permit holder makes a bulk purchase of liquor from the holder of a wholesaler’s permit issued under Chapter 19 of the Code.
(7) Seller—As used in this section includes:
(A) the holder of a wholesaler's permit, a general class B wholesaler's permit, or a local class B wholesaler's permit;
(B) the holder of a winery permit or wine bottler permit;
(C) the holder of a brewpub license when selling ale or malt liquor to Retailers;
(D) the holder of a brewer’s self -distribution permit;
(E) the holder of a local distributor's permit when making a sale of an alcoholic beverage that is not the sale of a malt beverage to a mixed beverage permittee or a daily temporary mixed beverage permittee ; and
(F) the agents, servants and employees of a permit or license holder identified in subparagraphs (A) – (E).
(c) Invoices. A delivery of alcoholic beverages by a Seller, to a Retailer, must be accompanied by an invoice of sale showing the name and permit number of the Seller and the Retailer, a full description of the alcoholic beverages, the price and terms of sale, and the place and date of delivery.
(1) The Seller's copy of the invoice must be signed by the Retailer to verify receipt of alcoholic beverages and accuracy of invoice.
(2) The Seller and Retailer must retain invoices in compliance with the requirements of §206.01 of the Code.
(3) Invoices may be created, signed and retained in an electronic or internet based inventory system, and may be retained on or off the licensed premise, as long as the records can be accessed from the licensed premises and made available to the commission during normal business hours.
(d) Delinquent Payment Violation. A Retailer who makes a delinquent payment to a Seller for the delivery of alcoholic beverages violates this section unless an exception applies.
(1) A Retailer who violates this section must pay a delinquent amount, and a Seller may accept payment, only in cash or cash equivalent financial transaction or instrument.
(2) A Retailer whose permit or license expires or is cancelled for cause, voluntarily cancelled, suspended or placed in suspension while on the Delinquent List will be disqualified from applying for or being issued an original or renewal permit or license until all delinquent payments are satisfied. For purposes of this section, the Retailer includes all persons who were owners, officers, directors and shareholders of the Retailer at the time the delinquency occurred.
(e) Reporting Violation and Payment; Failure to Report.
(1) A report of a violation or payment must be submitted electronically to the commission on the commission's web based reporting system at www.tabc.texas.gov.
(2) A Seller who cannot access the commission's web based reporting system must either:
(A) submit a request for exception to submit reports by paper; or
(B) contract with another Seller or service provider to make electronic reports on behalf of the Seller.
(3) All reports of violations or payment under this subsection must be made to the commission before the date the Delinquent List is published.
(4) A Seller who fails to report a violation or a payment as required by this subsection is in violation of this section.
(f) Prohibited Sales and Delivery.
(1) Sellers are prohibited from selling or delivering alcoholic beverages to any licensed location of a Retailer who appears on the commission's Delinquent List from the date the violation appears on the Delinquent List until the Release Date on the Delinquent List, or until the Retailer no longer appears on the Delinquent List.
(2) A sale or delivery of alcoholic beverages prohibited by this section is a violation of this section.
(g) Prohibited Purchase or Acceptance.
(1) A Retailer who violates subsection (d) of this section is prohibited from purchasing or accepting delivery of alcoholic beverages from any source at any of Retailer's licensed locations from the date any violation occurs until all delinquent payment are paid in full.
(2) A prohibited purchase or acceptance of a delivery of alcoholic beverages is a violation of this section.
(h) Exception. A Retailer who wishes to dispute a violation of this section or inclusion on the commission's Delinquent List based on a good faith dispute between the Retailer and the Seller may submit a detailed electronic or paper written statement with the commission with an electronic or paper copy to the Seller explaining the basis of the dispute.
(1) The written statement must be submitted with documents and/or other records tending to support the Retailer's dispute, which may include:
(A) a copy of the front and back of the cancelled check of Retailer showing endorsement and deposit by Seller;
(B) bank statement or records of bank showing funds were available in the account of Retailer on the date the check was delivered to Seller; and
(C) bank statement or records showing:
(i) bank error or circumstances beyond the control of Retailer caused the check to be returned to Seller unpaid; or
(ii) the check cleared Retailer's account and funds were withdrawn from Retailer's account in the amount of the check.
(2) A disputed delinquent payment will not be removed from the List until documents and/or other records tending to support the Retailer's dispute are submitted to the commission.
(3) The Retailer must immediately submit an electronic notice of resolution of a dispute to the commission under this subsection.
(i) Penalty for Violation. An action to cancel or suspend a permit or license may be initiated under §11.61(b)(2) of the Code for one or more violations of this section. The commission may consider whether a violation is the result of an event or incident when initiating an action under this subsection.
(j) Delinquent List.
(1) The Delinquent List is published bi-monthly on the commission's public web site at http://www.tabc.texas.gov. An interested person may receive the Delinquent List by electronic mail each date the Delinquent List is published by registering for this service online.
(2) Except as otherwise specified in subsection (k) of this section, the Delinquent List will be published on the fifth business day after the 25th day of the month for purchases made from the 1st to the 15th day of that month and for which payment was not received by the fourth business day after the 25th day of that month. Except as otherwise specified in subsection (k) of this section, the Delinquent List will be published on the fifth business day after the 10th day of the next month for purchases made between the 16th and the last day of the preceding month and for which payment was not received by the fourth business day after the 10th day of the next month.
(3) The Delinquent List is effective at 12:01 A.M. on the date of publication.
(4) The Delinquent List is updated hourly to reflect reports of payments submitted.
(k) Calculation of Time. A due date under this section or §102.32(c) of the Code or the publication date of the Delinquent List that would otherwise fall on a Saturday, a Sunday, a state or federal holiday (unless the commission is required to be open for business), or a standard Federal Reserve bank holiday (as published at http: //www.frbservices.org/holidayschedules /index.html) will be the next regular business day. For purposes of this section, a business day means a day which is not a Saturday, a Sunday, a state or federal holiday (unless the commission is required to be open for business), or a standard Federal Reserve bank holiday (as published at http://www.frbservices.org/holiday schedules/index.html). A payment hand delivered to an individual authorized to accept payment on behalf of the Seller is deemed received when the authorized individual takes possession of the payment.
(Rule Amended and Passed November 17th, 2016; Effective December 8, 2016)