TPS-TIE

Your business overview

Customers use your business to store items inside portable storage containers. These containers can be left at the customer’s location (on-site self storage) or be taken back to your warehouse for safekeeping.

Portable self-storage business uses storage containers, trucks and lifts to load and unload storage containers to and from the trucks.

For a fee, your business will move the storage containers from one place (house or office), to a different place. This is done under the customer’s direction (curb-to-curb delivery service).

This guide was created to assist persons engaged in the selling of prepared food and other related businesses to better understand the Washington State taxes that apply to their businesses. Some of the businesses included are restaurants, cafes, caterers, coffee shops, drive-in restaurants, snack bars, bakeries, personal chefs and some grocery stores.

Restaurants and similar type businesses are responsible for paying a variety of taxes based upon the activities they conduct. The most common of these taxes include: business and occupation (B&O) tax; Retail Sales Tax, & Use Tax. A brief description of each tax follows.

B&O tax classifications

The most common B&O tax reporting classifications for restaurants and similar businesses include: retailing, wholesaling, and service and other activities.

Collecting Retail Sales Tax

Sales of prepared food

Washington law exempts most grocery type food from retail sales tax. However, the law does not exempt “prepared food,” “soft drinks,” or “dietary supplements.” Businesses that sell these “foods” must collect sales tax. In addition, all alcoholic items are subject to retail sales tax.

Taxable purchases

Restaurants and similar businesses are considered consumers when purchasing goods or retail services for its own use and must pay retail sales or use tax when purchasing the following:

Use tax is a tax imposed on the use of tangible personal property in Washington when sales tax has not been paid. It is computed at the same rate as the sales tax. Unless specifically exempt by law, all tangible personal property purchased or used in this state is subject to either the sales tax or use tax, but not both, regardless of where or from whom the property is purchased.

There are many instances where sales tax is not paid to the seller. The following are examples of transactions where use tax would be due if sales tax wasn’t paid on the acquisition of these items:

Generally restaurants and the like predominately sell prepared food (see discussion under Tax Information for Retailers of Prepared Food); therefore they must collect retail sales tax on the sales of all food and food ingredients sold by them.

Generally items sold by bakeries (see Bakery Items, below) are exempt from retail sales tax; unless the item is sold with a utensil. However the charges for the nontaxable bakery items must be properly segregated from the charge for any taxable items, such as a cup of coffee. Otherwise, the entire un-segregated charge is subject to retail sales tax.

Are caterers required to collect sales tax?

Caterers must collect retail sales tax on their total charge to customers for catering services. This includes the charge for meals, equipment, decorations, as well as the catering service.

The caterer must collect sales tax based on the location where the meals are served.

What is a combination business?

A “combination business” is a business that sells both taxable and nontaxable goods at one location.

Sellers operating a combination business must collect sales tax on all their sales unless the seller properly segregates taxable and nontaxable sales.

A cash register or electronic checking machine that is programmed to identify and separately tax sales of taxable goods is sufficient segregation.