Sales Taxes for Food Takeout and Third-Party Delivery Services: Key Issues for Registration, Reporting, Compliance

During the pandemic, many restaurants and bars switched to a business model focused on using third-party service providers for food takeout and delivery. Food delivery services such as DoorDash, GrubHub, Postmates, and Uber Eats face increasing scrutiny on their sales tax compliance practices, which also causes significant compliance issues for the restaurants and bars that use them.

State tax rules post-Wayfair continue to create issues and unanticipated consequences for online sellers. The changes in sales tax compliance standards in these states significantly impact restaurants and bars that use third-party food takeout and delivery service apps. These businesses are now often considered marketplace facilitators and responsible for sales tax collection and remittance rather than restaurants and bars.

Tax professionals must be aware of the differences in state sales tax treatment of food takeout and delivery. In some states, restaurant meals are subject to sales tax, whether served on the premises, to go, or delivered. In other states, sales tax for food takeout or delivery differs from the rules for dining on the premises. Some states have set parameters for the taxability of food takeout or delivery based on various conditions.

Listen as our panel discusses sales tax collection laws and their application to restaurants that use third-party delivery service providers, state taxability standards, exemptions, and best practices in collecting and remitting sales tax as a marketplace facilitator.

1. Sales tax concepts applicable to food delivery and takeout
2. Problematic scenarios and issues to anticipate
3. Compliance; collection, remittance, and documentation
4. Ongoing compliance demands
5. States that pose particular issues

The panel will discuss these and other key issues:

• Is a food delivery service a marketplace facilitator?
• How can you determine if the sale of delivered food is subject to sales tax?
• What are the larger states' food takeout or delivery and sales tax rules?
• What other considerations exist for sales through a delivery service?

Learning Objectives

After completing this course, you will be able to:

• Identify the types of issues for food delivery sales transactions and varying state rules about taxing them
• Recognize states that present the most complex issues for restaurants using third-party food delivery services
• Determine trends and best practices to optimize a company's sales and use tax planning concerning food delivery sales
• Decide when a food delivery service is or could be a marketplace facilitator

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules; supervisory authority over other preparers/accountants. Specific knowledge and understanding of state sales and use tax on products, goods and services affecting multistate companies.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).