Texas Sales Tax Audit for Mixed Beverages
If you are a business owner in Texas, chances are that you are on our website because you either have a sales tax audit pending, or you want to prepare yourself for an audit.
Here is our latest Texas Comptroller’s sales tax audit story of a business owner and client in Dallas. A banquet hall owner was levied a tax bill of about $120,000.00 for uncollected sales tax on the sale of mixed beverages and the gross receipts of the rental of their banquet hall.
The Rule on Mixed Beverage Tax in Texas
A gross receipts tax is imposed on the amount received from:
- The sale, preparation, or service of mixed beverages, and
- The sale, preparation, or service of ice or nonalcoholic beverages that are sold, prepared, or served for the purpose of being mixed with an alcoholic beverage and consumed on the premises of the mixed beverage permittee.
The mixed beverage gross receipts tax is in addition to the mixed beverage sales tax imposed on the sale or service of alcoholic beverages, ice, or mixers.
The mixed beverage gross receipts tax is imposed on the person or organization holding the mixed beverage permit and not the customer. It may not be added to the selling price as a separate charge and may not be “backed out” from the amount received. An amount labeled as a “tax” is fully due to the state, in addition to the mixed beverage gross receipts tax.
Invoice and Receipt Guidelines
A mixed beverage permittee may include on an invoice, receipt, or bill:
- A separate statement of the amount of mixed beverage tax to be paid by the permittee on the customer’s purchase of alcohol.
- A statement of the combined amount of mixed beverage gross receipts tax paid by the permittee and mixed beverage sales tax imposed on the customer’s purchase of alcohol.
Mixed Beverage Gross Receipts Tax Receipt Examples
1. Separate Statement Example
Dbl Cheeseburger: 4.75
Fr Fries: 2.75
Mexican Martini (2): 7.00
Subtotal: 14.50
Sales Tax: 0.62
MB Sales Tax: 0.58
TOTAL: 15.70
Not included in bill: [Business Name] pays 6.7% tax ($0.47) on this sale of alcohol.
2. Combined Statement Example
Dbl Cheeseburger: 4.75
Fr Fries: 2.75
Margarita frz (2): 7.00
Subtotal: 14.50
Sales Tax: 0.62
MB Sales Tax: 0.58
TOTAL: 15.70
Included in bill: Customer pays $0.58 on this sale of alcohol.
Not included in bill: [Business Name] pays 6.7% tax ($0.47) on this sale of alcohol.
Total amount paid to state on alcohol: $1.05.
Important Disclosure Information
The mixed beverage gross receipts tax disclosure statements are for informational purposes only. Mixed beverage gross receipts tax:
- May not be separately charged to, or paid by, the customer.
- May not be shown as part of the calculation of charges to a customer on the invoice, receipt, or bill.
- This includes any charge labeled as a “Tax Reimbursement.”
The Alcoholic Beverage Code authorizes the Texas Alcoholic Beverage Commission to regulate alcoholic beverages, including issuing alcoholic beverage permits and collecting alcohol excise taxes.
Need Help Facing a Texas Sales Tax Audit?
Facing a sales tax audit in Texas? Contact our attorney for a consultation.
Frequently Asked Questions
What is the difference between the mixed beverage gross receipts tax and the mixed beverage sales tax?
The mixed beverage gross receipts tax is paid by the permit holder on the total amount received from the sale of alcoholic beverages and mixers, while the mixed beverage sales tax is paid by the customer and added to the final bill.
Can a business pass the mixed beverage gross receipts tax to customers?
No, Texas law prohibits businesses from charging customers separately for the mixed beverage gross receipts tax. It must be paid by the permit holder and not itemized on customer receipts.
What triggers a Texas sales tax audit for mixed beverages?
Common triggers include underreporting of sales, inconsistencies in tax filings, or random selection by the Texas Comptroller. High-volume sales businesses like banquet halls and bars are often scrutinized.
How should mixed beverage taxes be shown on receipts?
Businesses may disclose either a separate statement showing how much tax they are responsible for or a combined statement that includes the amount paid by the customer and the business, as long as it complies with disclosure rules.
Who enforces and regulates mixed beverage taxes in Texas?
The Texas Alcoholic Beverage Commission (TABC) regulates alcohol sales and enforces compliance, while the Texas Comptroller collects the applicable taxes, including excise and sales-related taxes.