Tax Type
Retail Sales and Use Tax
Description
Restaurants, Meals, Service Charges, Rental Equipment
Topic
Property Subject to Tax
Taxability of Persons and Transactions
Date Issued
11-04-1992
RESTAURANTS AND THE RETAIL SALES AND USE TAX
Meals
Virginia Regulation 630-10-64 provides that the retail sales and use tax will apply to retail sales of meals by restaurants, hotels, motels, clubs, caterers, cafes and similar businesses.
Service Charges
Tips and service charges that are voluntarily added to the bill by the customer are totally discretionary and are not part of the sales price. Therefore, the amount of the tip or service charge is not subject to the tax. Mandatory gratuities and service charges that are added to the charge for the meal without the ability of the customer to change the amount are considered part of the sales price and are therefore subject to the tax
Disposable Items
Disposable items such as:
-
- _ paper doilies and paper placemats;
_ plastic eating utensils, plates, cups and lids;
_ plastic or paper bags and disposable trays used for serving; and
_ straws, paper napkins and similar items
- _ paper doilies and paper placemats;
Preparation and Serving Items
Items purchased by restaurants or similar businesses for use in preparing or serving meals, such as kitchen equipment, china, glasses, silverware, tablecloths, cloth napkins and similar items are subject to the tax.
Rental Equipment
Purchases or rentals of tablecloths, tables, etc. is comparable to the purchase of preparation and serving items above and therefore cannot be purchased by the business under a Resale Exemption Certificate. The tax is applicable at the time of purchase or rental and must be paid to the vendor. These costs are passed on to the customer in the price of the meal. While the charge for the purchase or rental of such items may be separately stated on the bill the tax must be computed on the total amount charged to the customer.
Rulings of the Tax Commissioner