You may have heard about the upcoming ‘go live’ July 1, 2019 date for Uber Eats to begin calculating, collecting and remitting sales tax on behalf of restaurants. This change could cause confusion for restaurant owners who could be concerned about the potential for double taxation and also how they are calculating and reporting sales tax liability.
Uber Eats now falls under the “Marketplace Facilitator” laws which are state mandated and shift the sales tax collections and remittance obligations to the third-party seller. Beginning July 1, Uber Eats will begin to collect and pay the sales tax on all Uber Eats orders in the following states:
- District of Columbia
- New Mexico
- Rhode Island
- South Carolina
- West Virginia
Marketplace Facilitator legislation is currently pending in Kansas; Missouri has a go live date of July 1, 2020. Maryland, New York, and Vermont have also passed Marketplace Facilitator laws with future go live dates. Alabama, Connecticut, Minnesota, New Jersey, Oklahoma and South Dakota are already imposing a sales tax collection obligation on marketplace facilitators. It’s clear the list of states joining the bandwagon will grow.
“In order to avoid double taxation, it’s critical that owners work with the person responsible for preparing their sales tax returns to separate out the sales tax already remitted by Uber Eats from the total sales tax owed for the month,” explains Jill Burtin, CPA, Mize Houser QSR Compliance Manager.
Restaurant owners may also want to talk to their tax or accounting advisor about how they are calculating and reporting their sales tax liability if the sales tax is no longer remitted to the owner by the delivery service. “It’s important for owner/operators to understand that the way franchisees calculate sales tax on orders will not change. However, it will affect how their sales tax returns are prepared”, adds Burtin.
Businesses may not opt-out of the new arrangement since Uber Eats is legally required to collect and remit the sales tax.
Many owners will be curious to find out how much sales tax Uber Eats is collecting. “You can find the information on your weekly PayPal statement email, payment statements in Uber’s Restaurant Manager and 1099-K forms for year-end reporting,” says Burtin. “You can also reconcile your POS by looking at Uber Eats sales data.” Uber Eats provides additional information online.
If you have questions about how the marketplace facilitator laws impact your restaurants, please contact your Mize Houser tax advisor for help.