If you own a bar in Georgia, then you might be subject to an even more fickle and unpredictable sales tax audit. You will hear about this thing called a pour test.
Here is our story:
The system our client uses is called a Berg System that allows only items that can be scanned and items that have an electronic pourer on them that sends the price to the registers.
All of the beers were and have always been $3 for domestic & $4 for imported.
When there is a special on the beers, they sell for $2 and it is entered on the register as open domestic or open import.
All of the liquors are on a pouring system that has 7 price options.
All of the liqueurs used for mixing (i.e., triple sec & flavored puckers & schnapps) along with non-alcoholic mixers (i.e., sweet & sour, roses lime & grenadine) are all on a free pour pourer that does not ring to the register as they do not incur a charge.
For example: If a person orders strawberry lemonade as a drink, we use vodka, lemonade & strawberry pucker (Dekuyper). Only the price of the vodka rings to the register.
How Bar Audits Work
Focus on Accounting for Units of Product
The basic bar audit is all about accounting for units of product:
Bottles of beer
Glasses of wine or draft beer
Ounces of hard alcohol
Bottles are easy. Glasses of wine or beer are fairly simple x number of bottles or kegs divided by number of ounces per glass.
But accounting for the hard liquor becomes much more subjective.
The Challenges of Free Pouring
Most small local bars use a “free pour” where the bartender manually pours from a bottle into the glass, perhaps with the aid of a shot glass.
Patrons won’t return if they see the bartender carefully pour the drink into the shot glass and then dump it into the serving glass. They expect an over pour, where the shot glass is only a “suggested” measurement and the bartender continues to pour past the point where it is filled.
Why This Matters for Audits
Measuring in this manner makes establishing the cost of the drink very challenging.
One of the questions asked of the owner or bar manager at the start of the audit is what they expect that average pour to be.
Most times the response is between 1.0 and 1.5 ounces, which is reasonable, though 1.5 ounces is getting heavy. But some owners insist they are pouring more than that and stand by their answer even when the rest of the audit analysis shows this isn’t possible.
Why You Need Legal Help
When the auditor’s use their one-size-fits-all procedure, they are out of scope with the industry.
Call our office to mesh your particular bar policy with the State’s audit.
Frequently Asked Questions
What is a pour test in a Georgia bar audit?
A pour test is a method auditors use to estimate how much alcohol is being served compared to what’s recorded in the register. It helps determine if a bar is underreporting sales based on the volume of alcohol used versus revenue recorded.
Why is free pouring a problem during a sales tax audit?
Free pouring makes it difficult to track exact amounts of alcohol served. Without measured pours, auditors struggle to verify reported sales, which can lead to estimated assessments that don’t favor the bar.
Are mixers and liqueurs included in audit calculations?
Generally, mixers and liqueurs used for mixing especially those with no separate charge are not included in register data. However, their usage may still be evaluated during the audit to assess drink costs and consistency.
How do auditors estimate liquor sales if there’s no exact record?
Auditors estimate sales by calculating total ounces of alcohol purchased and comparing it to expected pour sizes. They divide this by the assumed average pour (e.g., 1.25 ounces) to approximate how many drinks were sold.
Why should bar owners get legal help for audits?
Sales tax auditors often apply generic methods that don’t account for each bar’s unique operations. Legal help ensures your bar’s actual processes like specials or open pours are properly understood and represented.
