Lots of folks have been asking of late, “Do I have to show taxes in drink prices?”
No. The law gives taxpayers two options.
- Include sales and liquor-by-the-drink taxes in drink prices on menus – or
- Include taxes on the final bill to the customer.
Including taxes in drink prices is optional, according to the Tennessee Department of Revenue. A copy of the notice from Revenue is included here.
Previously, the state required that menu prices include both liquor-by-the-drink and sales taxes.
Is Devo making a comeback? We hear the new-wavers from Akron, Ohio sarcastically singing:
Freedom of choice
Is what you got
Keep in mind that price schedules filed in TNTAP should still include all taxes, including both liquor-by-the-drink and sales taxes.
If menu prices do not include taxes, Revenue advises that the menu must state that the “15% LBD tax and sales taxes will be included on the final bill.” This language can be in a footnote at the bottom of the menu. We see no need to include the language on menu boards, as long as the language appears on printed menus.
Although there is no requirement that liquor-by-the-drink and sales taxes be separately itemized on invoices, most businesses separately display the totals.
BTW, LBD is the stylish abbreviation for liquor-by-the-drink. As in LBD tax.
