The California Board of Equalization recently issued Publication 287 which discusses Mobile Food Vendors. Reviewing the publication reminds me how challenging sales and use tax administration can be for a mobile vendor.
- The sales tax rate to be charged is based on the location where the sale is made. This can be challenging depending on how frequently different sites are visited.
- Menu items may be priced as tax-included if a notice is posted for customers that indicates that “All prices of taxable items include sales tax”. This statement is only required until July 1, 2014 when any taxable menu items are presumed to have the tax included in the sales price.
- The traditional records must be kept – cash register receipts, bills, invoices, computer sales logs, menus, and any other appropriate documentation.
- Determining what is taxable can be challenging.
– Hot prepared food and carbonated beverages are taxable except for hot bakery goods which are not taxable. Hot coffee and tea are not taxable when purchased to-go.
– If you provide tables, all food sold for consumption at the table is taxable. In addition, if you sell at a location requiring admission all sales are taxable.
– Sales of cold food products are generally not taxable and it is wise to track the sales separately. If not tracked separately and 80% of sales are food and 80% of the food sold is taxable, 100% of food sales will be considered taxable (80/80 rule).
- Don’t forget to remit the sales tax to the Board of Equalization whether you collect the tax separately or include it in your pricing.