1. Sales Tax Training Purchases of Catering Services June 28, 2016 Tax Management Office 1

2. Sales Tax Training Taxable Sales Taxable Purchases – Lodging – Prepared Food, Candy, Soft Drinks – Motor Vehicles – Waste Disposal Services – Airfare – Alcoholic Beverages Tax Management Office 2

3. Sales Tax Training Catering Services – Types of Charges Prepared food Tables, linens, plates, consumables Delivery charges Gratuities Labor Tax Management Office 3

4. Sales Tax Training Prepared Food Taxable Sold with eating utensils Purchases from caterer vs. from grocery store Tax Management Office 4

5. Sales Tax Training Other tangible personal property (tpp) Not taxable Tables, chairs Linens, tableware Tents ST3, Minnesota Certificate of Exemption Tax Management Office 5

6. Sales Tax Training Delivery charges Taxability follows the item delivered Delivered exempt tangible items – no tax Delivered prepared food - taxable Ability to allocate delivery charges Tax Management Office 6

7. Sales Tax Training Gratuities Optional gratuities are nontaxable Non-optional gratuities are part of the sales price and follow tax treatment of the charge Who is adding the gratuity? A gratuity added to a nontaxable charge would not be subject to tax Tax Management Office 7

8. Sales Tax Training Labor What does the labor relate to? Labor for preparing food is taxable Labor for setting up a room is not taxable Tax Management Office 8

9. Sales Tax Training Appropriate Tax Rate Sales tax is destination based Where is the sale occurring? What tax rate applies at that location? Special local tax rates Sales tax rate calculator on DOR website Tax Management Office 9

10. Sales Tax Training What to do if tax is not correct? Ask supplier to make change Self-assess use tax – Finance Forms Library UM 1763 for centrally filed use tax Consider whether want to do business with supplier if not cooperative Tax Management Office 10

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12. Invoice From TMO Caterers Served with napkins – prepared food Delivered to HHH Center – 7.775% rate applies Tip added to invoice by caterer – not optional Charge for tpp included as taxable Allocate delivery charge Tax Management Office 12

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15. Tax Management Office Research issues or contact us at www.tax.umn.edu taxhelp@umn.edu 612-624-1053 Tax Management Office 15