If you are being audited for sales tax in the state of Illinois, you might be surprised to find out that employee meals are subject to use tax. Make sure you are recording the number of meals that you are giving out each night so that the auditors do not consider the sales to be those made to customers, instead of your employees. Use tax is far less in Illinois as compared to sales tax.
Transcript
Okay, so our Q&A for today is from Donna in Plainfield, Illinois, and she’s asking “Am I supposed to be taxing my employees for their meals?” So, Donna, my assumption is that you’re a restaurant owner and you give out employee meals. Okay, so the real kicker here is that you’re living in the state of Illinois. Your business is in the state of Illinois, and that’s the trickiest part of this whole equation. Because the state of Illinois says, if you’re actually going to give out a plate of food to your employees as their employee meal, even though it’s a perk, you actually have to charge use tax on that. So the employee doesn’t necessarily have to pay you the ten dollars and you’re charging the full tax a full sales tax on that ten dollars. You just have to be charging the use tax, so that’s about sixty two and a half cents. So it’s unfortunate but document all of your employee meals as such, otherwise the auditor is going to look at it and say, hey these are meals that were probably prepared and sold, and you should have been charging full sales tax on that. So if you’re giving out 12 employee meals a night, you’re charging use tax 6.25 times all the meals, and you’re supposed to be reporting that to the state every month. Okay, so I hope that helped out. Thanks.
