In the last post I began discussing the taxabiity of restaurant to-go sales and the 80/80 rule. To read this information, see https://affordablebookkeepingandpayroll.com/?p=1345. This post will discuss the taxability of to go items if you don’t fall under the 80/80 rule.
1. Items sold à la carte
A. Beverages
Sales of the following beverages are not taxable when sold for a separate price to go:
• Hot beverages, such as coffee, hot tea, lattés, mochas, and hot chocolate. Note: Hot soup, bouillon, and consommé are not considered hot beverages.
• Noncarbonated beverages, such as fruit drinks, milk, and iced tea.
Sales of the following beverages are always taxable:
• Carbonated beverages such as soda or sparkling water
• Alcoholic beverages
B. Cold food products
Cold food products include cold sandwiches, milkshakes, fruit smoothies, ice cream, cold salads, cold bakery items,etc. A cold food product sold individually and to go is not taxable. The sale of a cold food product sold as part of a combination package may be taxable.
C. Hot prepared food products
To-go sales of hot prepared food products are taxable. A food product is considered a hot food product if it is heated to a temperature above room temperature. Examples of heating a food product above room temperature include; grilling a sandwich, dipping a sandwich in hot gravy, or using infrared lights, steam tables, or microwave ovens. Examples of hot prepared food products include hot sandwiches, pizza, barbecued chicken, soup, consommé, bouillon, steak, etc. Exception: Sales of hot bakery goods are not taxable when sold to go, unless they are sold as part of a combination package
D. Combination packages
Combination packages are two or more items sold together for a single price. The taxability of your sale depends in part on the type of combination package being sold.
• Packages that include hot items: If a combination package sold to go includes a hot prepared food, such as a hot sandwich or soup, or hot beverage, such as coffee or hot chocolate, its sale is taxable.
• Packages that do not include hot items: If a combination package sold to go includes cold food and a carbonated beverage, the portion of the selling price that represents the carbonated beverage is subject to tax. If a combination package sold to go includes cold food and a cold beverage other than a carbonated or alcoholic beverage, the sale of the package is not taxable. Exception—returnable containers. If you sell a combination of cold food products in an individual returnable container from which the individual serving is intended to be eaten (for example, a glass plate), the sale is subject to tax. In this instance, the sale is considered a sale of a served meal, which is generally taxable.
As you can see, the rules are a bit complicated when it comes to determining what is taxable and what is not. If you are unsure if your items are taxable, contact your local State Board of Equaliztion office for clarification. Make sure you have a good POS system which can track the taxability of your items properly, and that they are set up correctly to comply with all sales tax rules. Having it set up properly will guarantee you tax each sale properly, and will make reporting information on your return easy.
Need help with your filings? Contact us at 310-534-5577 or [email protected].
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