Restaurant Sales Tax Audits – What to Watch For – Tip #2

Second of 3 Blogs on this topic:  Restaurant Sales & Use Tax Audits for Catering

Minnesota Department of Revenue has dramatically increased the number of Sales and Use Tax audits in recent years.  The audits are getting more sophisticated and focused on a few key areas that can really trip up business owners.  This is the second blog in a series of three in which I will cover the top three areas where restaurants have found themselves on the wrong side of a sales and use tax assessment.

#2 – Catering

Catering can be a fantastic way to expand your brand and bring in revenue during slow times.  However there are specific sales tax pitfalls when it comes to catering.

Location, location, location

Make sure to charge the correct sales tax rate!  The sales tax rate will depend on where the event or catering will actually take place and how it gets there.  If you are in Dakota County but physically catering an event in Hennepin County, you must pick up the additional .15% sales tax rate.  If you are simply preparing the food the event organizer will pick up from you, just charge the sales tax rate for your local restaurant.

Additional Charges

• Delivery
• Setup
• Automatic gratuity

Each of the above additional charges are sales taxable even if they are separately stated from the cost of the food.

Also, don’t forget about location, location, location.

If you have any questions please contact Nick Swedberg, CPA at: nswedberg@myboyum.com.