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Grocery stores often contract with other businesses and allow them to prepare and sell food on their premises.
How to report sales if you are a food vendor
B&O tax
Report your gross sales, including amounts the grocery store withheld, under the retailing business and occupation (B&O) tax classification. You may qualify for the small business B&O tax credit, which can reduce all or some of your B&O tax liability.
Retail sales tax
If the grocery store collected sales tax on your behalf, report your gross sales, including amounts the grocery store withheld, under the retail sales tax classification. If you are filing your excise tax return electronically, use the “gross sales tax collected by facilitator” deduction. If you are using a paper return, you will select the “other” deduction for Retail Sales Tax and write in “gross amount collected by facilitator”. You can find more information in our article about marketplace sellers.
If you collect the retail sales tax, you will report the taxable amount under the retail sales tax classification. You will also report the taxable amount under the local sales and use tax classification, using the location code for the location where the customer collected the product.
If you are unsure if you should be collecting sales tax, you can find information in our industry guide for Tax information for retailers of prepared food.
Litter tax
Report your gross sales, including amounts the grocery store withheld, under the litter tax classification.
How to report sales if you are a grocery store
B&O tax
Report the gross sales by prepared food vendors under the retailing B&O tax classification. Then, claim the “other” deduction for the amounts sold by the prepared food vendors. The explanation for the other deduction should be third-party sales. Your store does not owe retailing B&O tax for these sales.
You must report commissions and fees that you withhold from prepared food vendors under the service and other activities B&O tax classification.
You can find more information in our article about marketplace facilitators.
Retail sales tax
Most grocery stores collect retail sales tax and submit it on behalf of prepared food vendors. In this case, report the taxable amount by prepared food vendors under the retail sales tax classification and the local sales tax classification.
Litter tax
Report your gross sales under the litter tax classification.
Example
An independent sushi business displays and sells their sushi products in a local grocery store. Under their agreement, the store collects the sale price of the sushi at their checkout. The store makes a 10% commission on each sale.
The store rings up a $9 sushi sale and collects retail sales tax. The store keeps their 10% commission of $.90 and pays the balance of the sale ($8.10) to the sushi business.
The grocery store would report the $9 sale under the B&O retailing classification. They would take the “other” B&O deduction with the explanation of “third party sales”. They would report the $9 sale under the retail sales tax classification and local sales tax classification. They would report the $.90 commission under the B&O Service and Other classification.
The sushi business reports $9 under both the retailing B&O tax and retail sales tax. The sushi business would take a deduction under the retail sales tax classification for “gross sales tax collected by facilitator”. The sushi business also reports the $9 sale under litter tax.
References:
RCW 82.04.050 – Sale at retail, retail sale
