WAC 124

Restaurants & Retailers of Prepared Food

Tavern Guide

Restaurant Guide

"Sale at retail," "retail sale."

Tax on retailers.

Tax imposed--Retail sales--Retail car rental.

Sales and use taxes authorized-- Additional taxes authorized--Maximum rates.

WAC 458-20-119 Sales by caterers and food service contractors; and WAC 458-20-124 Restaurants, cocktail bars, taverns and similar businesses The Department amended WAC 458-20-119 (Rule 119) and 124 (Rule 124) to recognize chapter 55, Laws of 2011 (SB5501), which provides a B&O, retail sales, and use tax exemption for meals provided without specific charge to employees of restaurants. Amended Rule 124 incorporates this legislation, and amended Rule 119 refers readers to Rule 124 for guidance on this subject.

These rules all refer to resale certificates. Proposed action is to add standard language to recognize reseller permits for sales made on or after January 1, 2010.

Restaurants, cocktail bars, taverns and similar businesses.Effective 12/9/93

Restaurants, cocktail bars, taverns and similar businesses explains the business and occupation tax and retail sales tax applications to sales by restaurants and similar businesses. This rule has been revised to recognize Dep't of Revenue v. Bi-Mor, Inc., 171 Wash.App. 197, 286 P.3d 417 (2012). The revision also includes an explanation of the sales and use tax exemptions for products sold to restaurants that impart flavor to food during the cooking process (Chapter 13, Laws of 2013 (ESSB 5882)).

Restaurants, cocktail bars, taverns and similar businesses explains the business & occupation (B&O) tax, retail sales tax and use tax applications to sales by restaurants and similar businesses. Rule 124 has been revised to clarify that the exemption from sales, use and B&O taxes only apply to meals provided to restaurant employees for free and that the exemption does not apply to meals provided to other employees that work outside the restaurant.

Donations to meal providers

Meal Assembly Kitchens This ETA provides guidance regarding the B&O and retail sales tax reporting responsibilities of businesses that provide menu options, purchase ingredients, and prepare the ingredients for assembly. It addresses “meal assembly kitchens” that allow customers to assemble their own entrées, and those that assemble entrées selected by the customer.

Direct Wine Sales to Consumers - New Registration and Tax Collection Requirements

Taxability of Soft Drinks

Is Prepared Food More Than 75% of Your Total Food Sales? Important Tax Information

Direct Wine Sales to Consumers - New Registration and Tax Collection Requirements

Retailers Subject to Temporary Carbonated Beverage Tax

Bottlers and Distributors Subject to Temporary Carbonated Beverage Tax

Restaurants Providing Complimentary Meals to Employees

Carbonated Beverage Tax Repealed

Direct Wine Sales to Consumers - New Registration and Tax Collection Requirements

"Prepared Food" Tax Changes

Restaurants Providing Complimentary Meals to Employees

Determining Whether Sales Tax Applies to Sealed Beverages

Claims of Constitutional Impairment of Contract made under Initiative 1183

King County Food and Beverage Tax Expires

Questions and Answers on Spirits Tax for Retailers

Beer and Wine Sales to Retailers

Sales of Charcoal Briquettes, Wood Chips, and Similar Items to Restaurants

No Sales Tax Due on Purchases Made With American Red Cross Cash Assistance Cards or FEMA Debit Cards Issued to Hurricane Victims

How to tax soft drinks and other beverages

Restaurants Providing Complimentary Meals to Employees

King County Food and Beverage Tax Expires

Retailers of Fountain Drinks B&O Tax Credit for Syrup Tax Paid

INTERVENING USE -- DEFERRED SALES OR USE TAX -- CATERERS.When a caterer supplies linens, tableware, and glassware as part of its services, it is using such items in its business and deferred sales or use tax is due. Invoices showing a "rental" of such items only demonstrate a method of calculating the cost of catering a unique event and not a true lease, rental, or bailment of such items.

PURCHASED FOR RESALE -- DISPOSABLE PRODUCTS -- FLOWERS -- ICE SCULPTURES -- CATERERS.Disposable items, the first use of which renders such articles unfit for further use, purchased by a caterer solely for use by its customers, are considered as having been purchased for resale.Such items include flower arrangements, ice sculptures, and the like ordered by the caterer's customers.

LEASE, RENTAL, OR BAILMENT -- DOMINION AND CONTROL -- CATERERS.In order to find a true lease, rental, or bailment, there must be a change in actual or potential dominion and control over the property.When a caterer supplies linens, tableware, and glassware to its customers as part of its services, there is no change in actual or potential dominion and control over such items.

SALE AT RETAIL -- LEASE -- INTERVENING USE.A person who purchases or leases an article of tangible personal property for resale or lease in the regular course of business without intervening use need not pay sales or use tax.

INTERVENING USE-- DEFERRED SALES OR USE TAX -- CATERERS.When a caterer supplies plates, silverware, glasses, cooking equipment, linens and tents as part of his services, he is using such items in his business and deferred sales or use tax is due.Invoices showing a "rental" of such items only demonstrate a method of calculating the cost of catering a unique event and not a true lease, rental, or bailment of such items.

LEASE, RENTAL, OR BAILMENT -- DOMINION AND CONTROL -- CATERERS.In order to find a true lease, rental, or bailment, there must be a change in dominion and control over the property.When a caterer supplies plates, glasses, silverware, cooking equipment, linens and tents to his customers as part of his services, there is no change in actual or potential dominion and control over such items.

TIPS -- GRATUITIES -- CATERER.A caterer who agrees with a customer on gratuity amount prior to performing service, and then invoices the customer for that amount must include the amount received in its tax measure.

SALE AT RETAIL -- LEASE -- INTERVENING USE.A person who purchases or leases an article of tangible personal property for resale or lease in the regular course of business and also puts it to intervening use, must pay sales or use tax.

MEALS PROVIDED TO EMPLOYEES VS. MEALS PROVIDED TO MANAGERS.Taxpayers failed to distinguish meals consumed by managers from those consumed by employees.Taxpayers failed to prove that there was no "exchange of services" involved with the managers' meals.

RETAIL SALES TAX -- OVER-COLLECTED.Over-collected retail sales tax may not be retained by the seller for its own use, but is held in trust and must be remitted to the state if not returned to the purchasers.Kitsap-Mason Dairymen's Association v. Tax Commission, 77 Wn.2d 812, 467 P.2d 312 (1970).

RETAIL SALES TAX - EMPLOYEE MEALS. Meals furnished as fringe benefits are part of compensation to employees for services rendered and are taxable as retail sales and subject to sales tax.

RETAIL SALES TAX - EMPLOYEE MEALS - FOOD COST.Where no specific charge is made, the measure of the tax will be the average cost per meal served to each employee, based upon the actual cost of the food, and does not include labor.

RULE 166, RULE 124; RCW 82.12.020, RCW 82.08.0293, RCW 82.12.0293: USE TAX – FOOD AND FOOD INGREDIENTS TO PRODUCE COMPLIMENTARY MEALS. A hotel’s purchases of food and food ingredients used in complimentary meals served only to hotel guests are not subject to retail sales tax at purchase because they are purchased for resale, and their subsequent intervening use is not subject to use tax pursuant to the statutory exemption for food and food ingredients.

RULE 124; RCW 82.04.070: RETAIL SALES TAX – B&O TAX – GRATUITIES. In the absence of evidence that the 18 percent gratuity that a taxpayer added on all parties over six was “suggested” or “recommended,” the gratuity is not “clearly voluntary.” Because the gratuities are not “clearly voluntary,” they are “mandatory” and are subject to the retail sales tax and retailing B&O tax as components of sales.

RCW 82.04.050(1)(a)(iii): RETAIL SALES TAX – INGREDIENT OR COMPONENT EXEMPTION – RESTAURANTS. Ingredient or component exemption from retail sales tax does not apply to food prepared by restaurant.

RULE 124; RCW 82.08.050. RETAIL SALES TAX – SALES OF BEVERAGES – PRICE INCLUSIVE OF TAX – APPROPRIATE NOTIFICATION. Absent evidence that sales slips separately state that retail sales tax is included in beverage prices, and absent evidence that a notice is posted that retail sales tax is included in beverage prices, the selling price of beverages is presumed to not include the retail sales tax.