Many of you have pivoted to offer take-out, delivery, and maybe even online sales during the COVID-19 crisis. If you are new to these services, we want to remind you that you need to check how the items you are selling are taxed in your state. It’s not as cut and dry as it may seem.
Food has some of the most complicated sales tax regulations out there. In many states, take-out is treated the same as dining in. But in others, food may be taxed differently if it is served cold, if it is sent out in the same form it would take in a grocery store, or even if you include utensils with it.
Another thing to consider is where you are delivering items. Sales tax rates change by state and sometimes even by city or county. If you are going to deliver across state lines, it can get complicated very quickly, so be sure to research things carefully before doing so as you may be liable to then collect and remit sales tax in that state.
The best source to determine your sales tax rates is your state’s resources page. You can quickly find a link to your state’s tax website here.
Alternatively, if you are using a third-party delivery service such as Grubhub, UberEats or Door Dash, check our previous post on how to make sure those are being integrated correctly. Currently, Grubhub and DoorDash are deferring commissions and Uber Eats is offering free delivery.