TR 18: Eating and Drinking Establishments
"Food service establishment means any place that is kept or maintained for the purpose of preparing or serving food, but does not include: (section 3-1-1, BRC, 1981)
Food service tax must be collected by food service establishments whether the food is eaten at the establishment or off its premises. The rate of tax can be found at subsection 3-2-5(b) , BRC, 1981 . "Cover charges, admission or entrance fees, and mandatory service or service-related charges shall be included as part of the purchase price of such food..." unless "the full amount of the charge is passed on to the employees of the food service establishment who have provided direct service to each person paying the charge, and if all federal and state income and other applicable taxes due on such charge have been withheld by the food service establishment and paid to the appropriate government (subsection 3-2-5(b), BRC, 1981)."
Sales tax must be separately stated on the bill or invoice of the service establishment, with the exception of vending machines and drinking establishments selling drinks by the glass. The tax may then be included in the selling price.
Food give-a-ways including, but not limited to, "happy hour" buffets, continental breakfast, peanuts and pretzels are subject to sales/use tax to be paid by the eating or drinking establishment, based on the cost of the food to the establishment. Food served at a fund-raiser when an admissions charge is paid is subject to food service tax to be paid by the fund-raiser (See TR22: "Fund Raising" for details). The admissions charge is subject to admissions tax (section 3-4-2, BRC, 1981) to be paid by the person paying the admissions charge (See TR1: "Admissions Tax" for detailed information). Fund-raising meals are subject to food service tax for the portion of the price paid that is applicable to the customary selling price of the meal (See TR22: "Fund Raising" for detailed information). Most fund-raising tickets will separate the meal amount from the donation amount.
Employers charging employees for meals and beverages must collect food service tax upon the selling price of the meals and/or beverages. If the meal is being subsidized by the employer, the actual cost of the meal may be higher than the selling price. But the tax continues to be based upon the selling price.
Eating and drinking establishments must pay sales/use tax on tangible personal property purchased for use in the operation of the business, including, but not limited to, equipment, fixtures, linens, silverware, china, glassware and table decorations. The purchase of disposable plastic and paper products served to and used up by the customer along with the meal or drink are exempt from sales/use tax. These disposable products include, but are not limited to, napkins, straws, plates, knives, forks, spoons and cups.
Last Updated on Tuesday, 21 May 2013 15:38