Including Sales Tax In The Price

Including Sales Tax In The Price https://wahospitality.org/wp-content/uploads/2016/05/shutterstock_282116291.jpg

Can I include the sales tax in my sales price?

Sales tax must always be separately stated on the sales receipt that is given to the customer. However, there are instances when the sales tax may be included in the advertised price.

A restaurant may advertise and/or sell meals, beverages, or other items at prices including sales tax, but only if the menu and other price information clearly indicate that sales tax is included in the price.

Calculating the taxable amount: If sales tax is included in the price, the amount of tax may be backed out of “gross receipts” to arrive at the amount subject to tax.

Example: A glass of wine is sold for $5, including sales tax. Assuming an 8.4 percent tax rate, the gross amount subject to tax is $4.61 (5/1.084).

Example: A coffee bar sells a double, tall, latte for $3, including sales tax. Assuming a tax rate of 8.4 percent, the taxable amount is $2.77 (3/1.084).

Note: If sales tax is not separately stated or properly indicated as included, it is presumed that retail sales tax was not collected. In which case, retail sales tax applies to the gross receipts of the business.

What about vending machine sales?

It is not necessary to separately state the amount of sales tax or to post “tax included” when making sales through a vending machine. See the Vending Machine Section here.

References: WAC 458-20-107; WAC 458-20-124; WAC 458-20-187

 

Rev. 12/18/12

 


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