TPS-TIE

Example 3

Mega Burgers Inc. is a large fast food corporation with six locations in the state of Washington. They also have several locations outside of Washington. Previously, Mega Burgers had segregated their sales and did not charge retail sales tax on exempt food items (food and food ingredients) as previously allowed under the rule (WAC 458–20–244). Mega Burgers has utensils (i.e. napkins, lids, plastic ware, straws, etc.) on the counters for customer use.

Example 4

Giant Food Store, Inc. is a large grocery store. In addition Giant Food Store also has a deli and bakery and a “you–make–it” salad bar onsite. The deli has utensils (i.e. napkins, lids, plastic ware, straws, etc.) on their counters for customer use. Previously, Giant Food Store had segregated their sales and not charged retail sales tax on exempt food items. Deli items could be purchased at the deli counter or paid for at the checkout stand. Bakery items and other food items can only be paid for at the checkout stand.

Listed below are several other types of income that can be received by restaurants and other similar businesses. The tax consequences of these types of income are discussed under each item.

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.

Are employee meals subject to tax?

Complimentary meals that a restaurant provides to the employees of the restaurant are not subject to sales tax, B&O tax, or use tax.

This exemption from sales tax, use tax and business and occupation (B&O) tax is only for meals provided without a specific charge to restaurant employees and does not apply to meals provided to other employees that work outside of the restaurant.

See the Games, Gambling and Similar Income guide.

Retail sales tax and retailing B&O tax do not apply to gratuities (tips) received under circumstances that are clearly voluntary. However, if a gratuity is added by the business to the check, bill, receipt, etc., such that it is not clearly voluntary, the charge becomes part of the selling price subject to retail sales tax and retailing B&O tax.

When gratuities are added to the check, bill, receipt, etc., by the business, the business has the burden to prove that the gratuity is clearly voluntary.

Can I include the sales tax in my sales price?

Sales tax must always be separately stated on the sales receipt that is given to the customer. However, there are instances when the sales tax may be included in the advertised price.

A business may advertise and/or sell meals, beverages, or other items at prices including sales tax but only if the menu and other price information clearly indicate that sales tax is included in the price.

Sales of Dietary Supplements are subject to retail sales tax. Dietary supplements include any product, other than tobacco, that is intended to supplement the diet and that meets all three of the following criteria:

Soft drinks are subject to retail sales tax.