Do You Deliver? State and Local Tax Consideration for Restaurants

With the takeout and delivery market estimated at $70 billion, according to TechCrunch, it’s no wonder restaurants of all types—from QSR to full service—are joining the delivery bandwagon. But for those companies debating whether to get into the game, there are some important state and local tax implications you must first consider:

Crossing City, County or State Lines If your restaurant delivers to customers in an adjacent city or ships to customers in another county or state, you may trigger sales tax nexus. This creates reporting and filing responsibilities for multiple jurisdictions.

Taxability of Food and Beverages If your restaurant delivers or ships across state lines, you should be aware that the definition of “food” varies by state, impacting taxation. In the “Streamlined States” such as Michigan, New Jersey, Kentucky, Nevada and Ohio, the definition of food does not include alcoholic beverages, dietary supplements, soft drinks or tobacco. Also, beverages…