Cover Charges

Cover Charges https://wahospitality.org/wp-content/uploads/2016/05/shutterstock_216790720.jpg

Does sales tax apply to cover charges?

A cover charge is generally a fee that is collected from guests to allow guests entry to a specific event or activity. The tax application depends upon the specific activity for which the charge is made.

  • Retail sales tax does not apply to fees collected for the privilege of listening to music, providing the opportunity to dance where no dance floor is provided or watching a pay-per-view show. The gross amount received is subject to B&O tax under the Service and Other Activities.
  • Retail sales tax applies to cover charges that provide a guest the opportunity to participate in a contest, such as karaoke or events where guests are an active participant. Gross receipts are subject to B&O tax under the Retailing.

Sales tax may be included in the amount charged if it is properly posted that tax is included. Refer to the Including Sales Tax in the Price section.

 

Rev. 12/29/17

 


This article is an excerpt from the Handbook for Excellent Restaurant Operations (HERO), published by the Washington Hospitality Association.  Want a hard copy of the whole manual?  It’s one of the many benefits of becoming a member!  Find out more about joining the Washington Hospitality Association here.

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Categories: HERO