Oklahoma Administrative Code › Title 710 - Oklahoma Tax Commission › Chapter 65 - Sales and Use Tax › Subchapter 19 - Specific Applications and Examples › Part 11 - "F" › Section 710:65-19-109 - Food; vendors of meals

Current through Vol. 41, No. 20, July 1, 2024
(a)
				  Vendors engaged in the business of selling meals to purchasers must collect,
				  report and remit sales tax on their receipts from such sales. It is immaterial
				  that no profit is realized from the operation of any such business if the
				  vendor is engaged in business. It is also immaterial that the class of
				  purchasers may be a limited one, such as the employees of a particular employer
				  who operates a cafeteria or other dining facilities for the benefit of his
				  employees.
(b) Meals provided to
				  employees at no cost or at a reduced cost are subject to sales tax. The
				  "
gross receipts
" or "
gross proceeds
" in the case of
				  a meal sold to an employee at a reduced price is the amount received for that
				  meal from the employee in the form of cash, check or credit card chit. Each
				  person required to make a sales tax report shall include in the gross proceeds
				  the sales value of all tangible personal property which has been purchased for
				  resale and has been withdrawn from stock in trade for use or consumption. Meals
				  provided to employees free of charge are withdrawals from inventory used or
				  consumed by the employer and sales tax is due on the sales value. "
Sales
				  value
" in the case of meals is the cost of materials withdrawn from
				  inventory to provide such meals.
(c) Complimentary meals provided free of
				  charge to customers are subject to sales tax. Each person required to make a
				  sales tax report shall include in the gross proceeds the sales value of all
				  tangible personal property which has been purchased for resale and has been
				  withdrawn from stock in trade for use or consumption and shall pay tax on such
				  sales value. Meals provided to customers free of charge are withdrawals from
				  inventory used or consumed by the employer and sales tax is due on the sales
				  value.
(d) Meals served free of any
				  actual charge or cost to an employee or customer constitute a withdrawal from
				  inventory of items purchased free of sales tax and such withdrawals are subject
				  to sales tax. For purposes of calculating sales tax liability, the sales value
				  of free or complimentary meals is presumed to be the greater of any
				  consideration received, or the cost or price paid by the vendor/taxpayer for
				  the food items included in the free or complimentary meal served, pursuant to
OAC
710:65-1-2.
(e) When an establishment provides a second
				  meal in place of the first meal which was discarded because it did not meet the
				  customer's specification, only one sale has been made and sales tax is levied
				  only on the replacement meal. If, rather than discarding the first meal, the
				  establishment serves the meal to another customer or employee, two sales have
				  been made and sales tax is levied on both meals.
(f) Meals provided to customers at a reduced
				  cost (i.e., discount or advertised special) are taxable. The "
gross
				  receipts
" or "
gross proceeds
" in the case of a meal sold
				  to a customer at a reduced price is the amount received for that meal from the
				  customer in the form of cash, check or credit card chit less any amount
				  designated by the customer as voluntary tip(s).
(g) In cases where two items are provided by
				  a restaurant, club or similar establishment (i.e., buy one, get one free or two
				  for one sale), the "
gross receipts
" or "
gross
				  proceeds
" derived from the sale of two items for the price of one is
				  the total amount of cash, check or credit card chit received less any amount
				  designated by the customer as voluntary tip(s).
Amended at 15 Ok Reg
					 2827, eff 6-25-98; Amended at 29 Ok Reg 542, eff
					 5-11-12