What amount is subject to tax when a customer uses a two-for-one coupon?
Selling meals on a “two for one” or similar basis is not giving away a free meal, but rather selling meals at a discounted price. Retail sales tax and retailing B&O tax apply to the amount that is actually received by the seller.
Example: A customer uses a two-for-one coupon to purchase two meals costing $10 each. Tax applies to $10, which is the actual amount charged for the two meals. If extra items are sold such as beverages tax applies to $10 plus the amount charged for the beverages.
Do I need to collect sales tax when I sell a gift certificate?
Retail sales tax does not apply to the sale of a gift certificate or gift card. Tax applies to the total cost of the meal at the time the gift certificate or card is actually redeemed.
Example: A customer purchases a $25 gift certificate in July. A sale has not really occurred at this time and no tax applies. In August the customer redeems the certificate and purchases a meal costing $30. Retail sales tax applies to $30. The restaurant charges the customer $30 plus tax. The amount of the gift certificate is then applied as a cash payment toward the total amount due. The customer pays the total bill less the $25 certificate.
Does tax apply to free meals?
If a restaurant provides a free meal to a person other than an employee, the meal is not subject to retail sales tax or use tax. However, if carbonated beverages are given away, use tax applies to the value.
Note: Meals provided to employees are presumed to be in exchange for services and are not considered free meals. See the Employee Meals Section.
References: WAC 458-20-119; WAC 458-20-124; WAC 458-20-108 and ETA 408.08.108 (pdf)