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Last Updated: 7/14/2016

Determining Sales Price

Sales tax included in the price

If you include sales tax in the price, you must notify your customers in writing. You can do this by posting a sign or placing a statement on your menu that “all prices include sales tax.”

Sales tax on food and drinks purchased in a restaurant

When prepared food and drinks are sold in a restaurant, show the sales tax as a separate item on the total bill.

Sales tax on drinks purchased in the bar area of a restaurant

When drinks are sold in the bar area of a restaurant, you may include sales tax in the price of the drink. This makes paying for drinks easier. You must notify customers that sales tax is included in the price.

When sales tax is included in the price of drinks in the bar area of a restaurant, you must track bar sales separately (on a separate register) from restaurant sales. Handle sales tax the same for all bar sales.

Local sales tax

Some cities and counties have local sales and use taxes. If you make sales into or are located in an area with a local tax, you may owe local sales or use tax. For more information, see Fact Sheet 164, Local Sales and Use Taxes.

To determine the sales tax rate, use the location where the product is received by the customer, typically your business or a delivery address. You can use our Sales Tax Rate Calculator to help you determine the sales tax rate.

Note: The rate calculator does not include special local taxes.

For more information, see:

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