Bret Curtis, CPA, JD, LLM
What do construction cranes have to do with restaurant food deliveries? Both are now subject to sales tax thanks to a recent ruling by the Missouri Supreme Court.
Citing a recent Missouri Supreme Court case (Alberici Constructors Inc. v Director of Revenue), the Missouri Department of Revenue (DOR) reversed its earlier position on whether delivery fees were subject to sales tax. The Alberici case held that charges for delivery of a rental crane are subject to use tax because the renting parties intended for delivery of the crane to be part of the crane rental.
The court ruling trickled down to the hospitality industry particularly to those businesses that are not collecting or remitting tax on delivery charges. Businesses that provide delivery as part of the sale of tangible personal property (including food) now have to collect sales tax on the delivery fee, even if the delivery charge is separately stated.
What can restaurant owners do to comply with the new ruling?
Restaurants that offer delivery services need to start collecting and remitting sales tax on the delivery fees. The key with sales tax is to know when to collect and when not to collect. It is a tax that is ultimately intended to be paid by the customer, but if a restaurant owner does not collect and remit the tax correctly, the owner will ultimately be held liable for the tax he or she should have collected.
If you have questions regarding this new ruling, contact us to discuss how it may affect your organization.