By: Richard Fleming
Imhotep once said, “Eat, drink, and be merry.” As the holidays approach us, alcoholic spirits will flow freely, along with holiday cheer as friends and family do just that. So, here’s a teachable moment about who is responsible for paying mixed beverage sales tax and mixed beverage gross receipts tax that is distilled spirits, beer, ale and wine that is sold and served to consumers on premises.
In Texas, the Alcohol Beverage Code authorizes the Texas Alcoholic Beverage Commission to regulate alcoholic beverages, including issuing permits for it, and to collect alcohol excise taxes. Texan mixed beverage permittees must pay a mixed beverage sales tax on each sold, prepared, and served.
But here’s the thing: Mixed beverage sales tax is also paid on each nonalcoholic beverage and on ice sold, prepared or served along with alcoholic beverages. In short, they must pay taxes on the Coke and ice in that rum and Coke too. Mixed beverage sales tax are in addition to the 6.7% mixed beverage gross receipts tax imposed on the mixed beverage permittee, the mixed beverage permittee is obligated to pay the mixed beverage gross receipts taxes not the consumer.
Here’s where it gets slightly complicated. Unlike mixed beverage gross receipts tax, a mixed beverage tax payer may pass mixed beverage sales taxes on to customers. Here’s how:
- Adding line items for the mixed beverage sales tax on customers’ bills
- Adding tax with a type of escrow concept, that is rolling mixed beverage sales tax into sales prices. However, a permittee’s records must show that the sales price of alcohol includes mixed beverage sales tax.
A mixed beverage tax payer (permittee) may state one of the following on invoices, receipts or bills:
- That mixed sales tax is indeed included in the sale
- The amount of mixed beverage sales tax
- The combined amount of mixed beverage taxes on the sale (what customer paid, and what business paid together to the state.)
- The combined mixed beverage sales tax and mixed beverage gross receipts tax amount on all receipt items
The tax rate on mixed beverage sales is 8.25 percent (.0825) and 6.7 percent (.067) on mixed beverage gross receipts tax for a total combine tax rate of 14.95 percent. Both Mixed beverage sales tax and gross receipts tax must be reported by the 20th day of the month following the reporting period deadline.
As with any tax deadline not met, there are penalties. If taxes are paid 1-30 days after the deadline, a permittee pays a 5 percent penalty. If the tax is paid over 30 days after the deadline, there’s a 10 percent penalty. So it pays to pay on time.
When we visit bars or restaurants that serve alcoholic drinks, we never think about The Lone Star State getting its share of what we pay. But now you know the financial mechanics behind what goes in to keeping the beer flowing and the mixed drinks coming to enhance your dining experience. Let’s drink to our newfound wisdom.
Bye for now,