- The restaurant industry is experiencing changes due to consumer behavior, delivery platforms, and third-party food preparation.
- State and local tax authorities are increasing sales and use tax audits, especially involving third-party food preparers.
- Third-party food preparers include ghost kitchens, commissary kitchens, and co-packers.
- These models offer benefits like cost savings and flexibility but complicate sales and use tax issues.
- Determining taxability of prepared food and services is challenging and varies by jurisdiction.
- Resale certificates are used to exempt purchases from sales tax but are often misused or poorly documented.
- Audits focus on whether transactions qualify for resale exemptions and if proper documentation exists.
- Incorrect application of resale exemptions can result in significant tax assessments.
Source: thompsontax.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
