Texas Sales Tax On Employee Meals
The general rule is that food prepared at a restaurant and sold is subject to sales tax. However, the rule changes when there is an employee involved.
The rule: Meals furnished to restaurant employees immediately prior to, during, or immediately after a work shift are not taxable, if the meals are provided for the convenience of the restaurant owner and the employees are involved in preparing or serving food.
The key here is that the employee must be at work at the time of their shift and that the employee themselves had a hand in the preparation of that meal. That by furnishing the meal to the employee there is a benefit to the employer such that their employee would not have to leave their workplace which would require more time being spent away and decrease productivity during their shift. Similarly, the tired and hungry employee would not be famished on their way out of work. Only then, will the employee meal not be taxable.
During an audit, it is important to show the recipient (employee) of the work-sponsored meal as well as their corresponding time chart. For example, if the employer simply writes down “employee meal,” the auditor will not have the ability to tie that employee meal to the corresponding employee – that would make it taxable. Even if the meal is tied to the corresponding employee, then, their time chart needs to prove that they were actually at work.
Facing a sales tax audit in Texas? Contact our attorney for a consultation.
