Restaurant Alcohol and Food Tax higher than 10%?!?

[Michael71]

I work in the restaurant computer business & come across this quite often.

When we program computers for restaurants with bars we generally only use two diff tax rates:

Inclusive & Added Percentage

I'll use round #'s to explain...

Lets just say that sales tax & liquor tax were both 10%.  If you bought a $10 gls of wine, the restaurant could include both taxes & you would only pay $10 for the drink.  However, when the restaurant looks at reports, they will only show $8.33 posted to NET SALES. If you ever go to a bar & each drink price is a round $ amount, this is most-likely what they're doing & it makes it easier on the bartender/cocktail.

They can also mix/match which tax rates get Added or Included.  Some will include Liquor Tax but add Sales Tax.  Either way you are paying the tax.  If they include the Liquor tax, they have to raise the price to compensate.

Sorry to wake this dead horse! Gotta post so I can become a "citizen", etc...

[cmanson13]

No matter how they want to do it, the law states the menu price must include the 13.5.

Anybody that is putting that on the bill and lowering the menu price has an unfair advantage over the one's doing it by the law!

[carltonplace]

Strange that the law would support taxing the tax. If the sin tax is included in the menu price and then the sales tax is applied to the entire bill, who gets to keep the 8% that was applied to the 13%?

[Michael71]

quote:Originally posted by cmanson13

No matter how they want to do it, the law states the menu price must include the 13.5.

Anybody that is putting that on the bill and lowering the menu price has an unfair advantage over the one's doing it by the law!

I would like to see the law to know exactly how it's written.  But, I don't see why they care how it's shown to the customer.  They don't tell you how much to charge the customer...therefore, the tax amount will always vary based on the price.  Business is still paying 13.5% to state based on their "net" liquor sales.

[Osupikapp1]

quote:Originally posted by carltonplace

Strange that the law would support taxing the tax. If the sin tax is included in the menu price and then the sales tax is applied to the entire bill, who gets to keep the 8% that was applied to the 13%?

Well depending on the restaurant.  If you look at the receipt and it says 4.50 for a beer and you only paid 4.50 they must be using a inclusive price.  
But if you look at the receipt and it says 3.23 beer price and then the taxes are listed at the bottom you now see what the restaurant is actually charging for the beer.  The final cost is the same, the only difference is what the restaurant lets you see.  
I like to see what the real cost is vs the "mystery cost"  plus you know if you see liquor tax than you are getting a "strong beer" vs someplace like fox n hound where you pay for a strong beer to be served 3.2  blah
osupikapp1

[carltonplace]

Beer Price: 3.53
13.5% Sin tax: .47
Menu Price: 4.00
8% Sales Tax: .32

Amount of Sales tax applied to sin tax: .03

Who gets the .03 cents?

[Michael71]

quote:Originally posted by cmanson13

Los Cabos is one of the few that does the sin tax right.  The law states the sin tax has to be built into the menu price.  Most of the restaurants around Tulsa add the sin tax above the menu price.  The tax commission when asked about this says they are flexible in the way it is done, even though the law states HAS TO.  

You also have to watch for places putting sales tax on the liquor tax (tax on tax).  This is another violation that the OTC doesn't care about.  Talk about a rip off.

This is all spelled out on OSCN (Oklahoma State Courts Network).  Search for Title 37 section 576 of the Beverage Control Act.

Here is the spreadsheet I use to figure out if I've been overcharged.  You will need the menu price for drinks and the tax rate for that area.

Code Select Expand


 Content           Column    Code
Beverage (Menu Price) B4   Enter Menu Price
Bev Retail Price     B5   =B4-B6
Bev GRT (13.5%)      B6   =B4-(B4/1.135)
Bev Sales Tax        B7   =B5*0.08517
Food                  B8   Enter Food Cost
Food Sales Tax       B9   =B8*0.08517
Total (Corrected)    B10  =B4+B7+B8+B9
                     B11  =(B4+B8)
                     B12  Blank
Amount Paid           B13  Enter Amount Paid
Difference            B14  =B10-B13

If the difference is positive then you are probably at a bar.  If it is zero then you must be at Charlstons.  

I just spoke with OTC & they said that they don't care if it's included or added to the receipt...as long as the restaurant owner can separate the net & tax collected.

[cmanson13]

Doesn't really matter what the OTC wants to enforce since it has been spelled out for them in a black letter law.  The intent of that law was to reduce consumption.  By having the price built into the menu the consumer might choose to drink less.  Never really worked on me, just makes me choose cheaper drinks, sometimes.

The law does state that the sales tax has to be calculated on the base price (base + sin = menu).  So the restaurants charging tax on tax are doing it wrong.  The OTC only cares that all taxes are remitted, not that the consumer is paying more than they should.

[cmanson13]

(d) Example. If the total retail sales price for a mixed drink is $3.00, each drink sold, and each drink served as a "complimentary drink" incurs a Forty-one Cent Gross Receipts Tax which shall be
O AC 710:20 OKLAHOMA TAX COMMISSION
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added to the total retail price to form an advertised price of $3.41. Sales tax shall be calculated on the total retail price of $3.00. [See: 37 O.S. §576]
[Source: Amended at 15 Ok Reg 2800, eff 6-25-98; Amended at 19 Ok Reg 1507, eff 5-25-02]

http://www.tax.ok.gov/rules/rule2006.pdf

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