TAX NEWS - January 2009

Food Tax FAQ - State of Georgia tax

Q. Does the sales tax exemption apply to food bought at a restaurant?

A. No. The purchase of food at places of accommodation, snack bars in public places, newsstands, theaters, sporting and entertainment facilities, lunch wagons, and food consumed at restaurants with seating on the premises to include parking areas, is excluded from the off-premises food consumption exemption. State and local taxes are due.


Q. Does sales tax apply to purchases of food for off-premises consumption?

"Eligible food and beverages" mean any food item found in the federal Food Stamp Act of 1977, as amended, 7 U.S.C.A. 2012 (g), as such Act existed on January 1, 1996, whether or not the food was prepared for off-premises consumption. State tax and local option taxes are not due on these transactions EXCEPT any local option tax with an effective date before October 1, 1996 (MARTA, SPLOST, LOST). The local option tax(es) under Article 2A (Homestead Local Option Tax) is exempt. The City of Atlanta municipal is collected on the sale of eligible food.


Q. Does the sales tax exemption apply to businesses buying "eligible food and beverages"?

A. No. The business can buy food tax free for resale under a certificate of exemption. Food bought for a break room is subject to state and local tax.


Q. Is a restaurant responsible for sales and use tax on a meal given to an employee?

A. Yes. The restaurant is responsible for payment of the tax on the food that is taken out of resale inventory and given to an employee.


Q. Are gratuities paid with a meal subject to sales tax?

A. If the gratuity is mandatory, the charge is taxable. If the gratuity is not mandatory, it is not taxable unless not itemized on the customer's bill.