Romantic dinners, bouquets or chocolates – how are you spending Valentine’s Day this year? As we approach the holiday of love, we thought it would be interesting to see how sales tax applies to different products or situations you may encounter!
Gifts: Taxable Or Not?
Are you thinking of getting your valentine a box of chocolate, candy or other food gift this year? Food and candy sales tax varies depending on the state. What you pay in taxes in one state for a box of chocolates will be completely different in another. One of our latest blog articles dives into specific state tax rates on candy.
If you buy them another sort of gift, such as a stuffed animal or flowers from a brick and mortar store, your local state sales tax will apply to that item. Again, state sales tax varies.
If you buy the gift online, you will most likely have to pay sales tax, thanks to the 2018 Supreme Court Case, South Dakota v. Wayfair, Inc. Every state that has sales tax now has implemented some level of economic nexus. Oh, and shipping? Yes, maybe sales tax is due on that fee as well – depends on the state and how it’s stated on the invoice.
Event Tickets
Taking your valentine to a ticketed event like a sports game or show? You will be charged sales tax based on the state that it is in. If you are attending an online event – which has gained popularity throughout the COVID-19 pandemic – it gets a little trickier since often people from any state can attend. So which state’s sales tax rate are you charged? Though there is not one clear answer to this question, most of the time you will be taxed the rate from wherever the virtual event is “held.” This article dives deeper into the topic of virtual events and sales tax.
Romantic Dinner & Sales Tax
If you decide to cook a romantic dinner at home, it will most likely not be taxed – though 13 states still do charge at least a slight sales tax on groceries.
Going out is a different story. If you decide to dine in a restaurant, or get takeout, you will be taxed at different rates and for different items depending on the state.
This article has a guide to state-by-state to-go, restaurant and grocery sales tax, but here are a few examples of state requirements:
- In our home state of California, most taxable sales at a restaurant are going to be of food and beverages – however in some instances you are charged sales tax on corkage fees, cover charges and other things.
- Prepared food is taxable in Washington.
- “Restaurant-type food” is taxable in New York. This includes food sold at a restaurant or similar establishment in a form ready to be eaten. For example, a bag of bagels would not be taxable, but a sliced, ready-to-eat bagel would be.
Still Looking?
Still firming up who your valentine might be for the big day? If you subscribe to online dating apps, you may be charged sales tax on the monthly charge for the app. Sometimes apps like that decide to cover the sales tax themselves, rather than to charge it through to the customer.
As you can see, sales tax gets complicated quickly and typically varies by state. Don’t worry about it too much this week, and enjoy Valentine’s Day with your loved ones. Our team of experts can help determine your tax liabilities after the holiday! But all kidding (and arrows and cupids) aside, these issues get complicated if you are the seller of these items. Buyers tend to have to grin and bear the imposition of sales tax. But the responsibility to collect is on the seller of taxable items. It’s so important to get that right, because when you sell directly to consumers, you really only have that one opportunity to get the sales tax collection right. If the seller doesn’t collect sales tax correctly, the burden of the tax itself can be shifted to the seller. That’s often where clients seek our advice!
Do You Have Other Sales Tax Questions?
Since state tax legislation is constantly changing, working with an experienced team of state tax consultants like Miles Consulting Group is a great way to ensure you are meeting all of your sales tax obligations. If you have questions about your tax liability or any other state sales tax compliance questions, please contact us today. We’re happy to clarify any multi-state tax issues you’re trying to navigate.
