New Georgia Regulations Clarify Sales Tax Rules for Restaurants

New Georgia Regulations Clarify
Sales Tax Rules for Restaurants.
Refunds May Be Available!
The Georgia Department of Revenue has issued a new regulation that clarifies the
sales and use tax rules for restaurants and other establishments that sell prepared
food. This new regulation, Rule 560-12-2-.115, is highly relevant to taxpayers in the
food and beverage industry, as it enumerates taxable and tax-exempt items and
provides concrete examples explaining how the sale of food and purchases by
restaurants are to be taxed in the State of Georgia.
The Department has clarified that several purchases by restaurants are exempt
from sales tax, including the following:
a. Food packaging - single-use, disposable packaging containing food that is
provided to the customer
b. Items for sale – food ingredients or components of meals that will be resold by
the restaurant
c. Single-use items provided with meals – disposable items made available to
customers as a component part of a meal, including straws, stirrers, napkins,
disposable silverware, toothpicks, tray liners, and wet-naps
d. Food items provided with meals sold – this includes condiments and other
items available to customers without a separate charge such as bottled
condiments left on tables, condiment packets, and complementary bread
or chips.
Further, the Department has also identified certain items often overlooked by
restaurants that are subject to sales and use tax, including the following:
a. Mandatory gratuities – whether negotiated in advance of a meal, unilaterally
added by the seller, or mandatory under certain conditions (such as
when a defined percentage is added for parties of a certain size when not
conspicuously stated that the amount may be removed).
b. Items used or consumed by the restaurant – this includes the cost of
complimentary meals provided to customers or employees, restaurant décor,
serving utensils, flatware, linens, placemats, and single-use items that are not a
component of a meal sold to a customer.
c. Other service charges – any other charges by a restaurant that are necessary
to complete a taxable sale including delivery fees and bartender service.
Taxpayers who have
previously paid tax on
purchases of items that
the Regulation clarifies
as exempt may request
a refund of sales tax
erroneously paid within
the past three years.
Potential for Sales & Use Tax Refunds
Taxpayers who have previously paid tax on purchases of items that the Regulation
clarifies as exempt may request a refund of the sales tax erroneously paid within the
past three years. To determine whether tax was paid, restaurants and franchisees
should examine past invoices from food service vendors to determine whether
tax was assessed on exempt items. The assessed sales tax would be present as a
separate line-item on the invoice.
If sales tax on exempt items is discovered, the taxpayer may either pull the related
invoices they have on file or request this information and all related invoices from the
past three years from that vendor.
For more information on
our services, contact:
In order to request a refund, a taxpayer must follow the standard procedures
under OCGA §48-2-35.1:
1. The restaurant should first request the refund from its vendors by providing a
written request as well as a completed Form ST-5 Exemption Certificate. The
vendor may either request the refund directly on behalf of the restaurant or can
provide the restaurant with a completed Form ST-12A Refund Waiver.
2. If the restaurant receives a completed Form ST-12A Refund Waiver from the
Tommy Lee
Partner-in-Charge of Retail,
vendor, the restaurant may apply directly for a refund with the Department of
Franchising & Hospitality
Revenue. This may be done by filing a Form ST-12 Refund Request and attaching
[email protected]
the Form ST-12A as completed by the vendor.
770-353-71709
3. If the vendor does not want to issue a refund to the restaurant directly or does
not provide a Form ST-12A within 90 days, the restaurant may file a refund
claim directly with the state by completing the Form ST-12 Refund Request and
including a Form ST-12B Purchaser’s Affidavit instead.
Requests for refunds may take up to a year for the state to process and the taxpayer
is often required to provide supporting documentation, including invoices, to the
Department of Revenue.
Jeff Glickman
Partner-in-Charge of
State and Local Tax services
Habif, Arogeti & Wynne has experience in obtaining refunds and can assist
restaurateurs and franchisees with the process of computing and requesting refunds
[email protected]
770-353-4791
of the overpaid sales tax. For further information, please contact Tommy Lee,
Partner-in-Charge of the Retail, Franchising & Hospitality group at Habif, Arogeti &
Wynne at [email protected] or Jeff Glickman, Partner-in-Charge of State and
Local Tax services, at [email protected].
Any tax advice contained in this communication (including any attachments) is not intended or written to be used,
and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state
or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed
herein. Please do not hesitate to contact us if you have any questions regarding this matter.
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