Restaurant Taxation: Calculating Tips and FICA Tip Credit; Food Donations, Sales Tax, and Employer Retention Credit

Sales tax considerations are immense. With 45 states and D.C. requiring sales tax collection and local taxes, charging, reporting, and remitting these taxes is challenging. In addition to each state and jurisdiction having its tax rate, states often charge varying rates for service, tangible goods, liquor, and take-out. Missing deadlines and payments can result in significant penalties.

Restaurants--an industry with high cash sales--are often targeted by states for sales tax audits. Restaurants that do not keep good records can find themselves in a quandary during audit, including being met with varying audit techniques to ascertain tax liabilities. Owners should be particularly careful since sales taxes are trust fund taxes and carry with them the potential for personal liability.

In addition to unique challenges, significant tax benefits are available to restaurants. These businesses receive an enhanced tax deduction for food donations and a lucrative FICA tip credit. Restaurants are eligible for employer retention credit as well.

Listen as our panel of restaurant experts helps alleviate taxing issues related to restaurant ownership. They will cover how to claim the FICA tip credit, best practices for capturing and reporting sales tax and tips, and taking advantage of the employer retention credit.

1. Restaurant taxation: an overview
2. Reporting tips
3. FICA tip credit
4. Food donations
5. Sales tax
6. Cost segregation
7. Pass-through entity elections
8. Work opportunity tax credit and Employee retention credit

The panel will cover these and other vital issues:

• How to report and claim the FICA tip credit
• What qualifies for the enhanced deduction for food donations
• Which restaurants would benefit from a cost segregation study
• Best practices for capturing and reporting employee tips

Learning Objectives

After completing this course, you will be able to:

• Identify restaurants that may benefit from a cost segregation study
• Determine when to file Form 8027 for tip reporting
• Ascertain which businesses may benefit from the recent QIP correction
• Decide when and how donating food may provide restaurants with tax benefits

• 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 preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

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).