How do Wayfair’s Sales Tax Changes Impact Restaurants?
posted May 16, 2019 by Laura H. Yalanis, CPA, MST in the Restaurateur Blog
Restaurants, are you wondering how the Wayfair sales tax decision impacts you? The U.S. Supreme Court decision in South Dakota v. Wayfair, Inc. asserts that a state can require a seller of goods to collect sales tax from its customers even if the seller does not have a physical presence in the state (Check out our blog, U.S. Supreme Court Ruling in South Dakota v. Wayfair, Inc. – Key Takeaways for all Sellers). Restaurant owners and operators doing business in multiple states will need to evaluate their sales and purchases completed across state lines. Learn more.
Wayfair’s impact on restaurants
All businesses that provide services or deliver their products to customers located in another state must comply with the sales tax changes. Nowadays many restaurants sell their products online, which can trigger sales and use tax.
Picture this: A sandwich shop sells its famous pickles online to customers all around the world. Given the Wayfair decision, the restaurant now has to evaluate its compliance with state and local taxes in all of the jurisdictions where the pickle buyers live.
Questions you should ask yourself:
Restaurant owners, can you answer “yes” to any of the questions below? If so, your restaurant is likely impacted by Wayfair and should begin taking steps to become compliant.
- Does your restaurant deliver goods or make sales to customers in states where you are not registered? Or where you are not filing sales and use tax returns?
- Does your restaurant file sales/use tax returns in every state where you ship or deliver goods or provide services?
- Does your restaurant ship or deliver goods, or provide services to customers located in states where you have little or no in-state physical presence?
- Does your restaurant make retail sales of tangible goods besides food that get delivered to customers in other states?
- Does your restaurant provide memberships, online services or make sales of digital goods?
- Has your restaurant received a “nexus questionnaire” or received audit or tax notices from any state where you are not currently registered for sales/use taxes?
- Do you provide delivery services/personnel, and what distance do employees or other company representatives travel to deliver your products?
- Do you facilitate sales through a third-party delivery service or an online ordering service?
Take these steps to become compliant
- Determine the states in which you have nexus (physical presence of property and/or employees or agents in the state)
- Determine whether your products and services are subject to sales and use tax in the states and localities where you have nexus
- Resolve any historical tax liabilities. Using historical sales and income data, determine the historical sales and use tax and state income tax exposures your restaurant has experienced.
Once your business makes these determinations, you may need process improvement or ongoing assistance with prospective sales and use tax and state income tax compliance obligations.
We can help you navigate your Wayfair obligations. Contact our Hospitality Services Team today.