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California Simplifies Sales Tax for Food Truck Vendors

  • Nov 27, 2013 | Gail Cole

 California food trucks may soon have a simplified system for sales tax.

With Thanksgiving tomorrow, food is on the mind. For many, that means sitting with friends and family around a table laden with turkey and potatoes. For others, it may mean a trip to a favorite food truck.

One of the most appealing aspects of food trucks is speed of service. You trot to your favorite food truck, stand in line, order, and voila! A tasty meal is delivered into your hands. There’s no wasted time. That can be invaluable, even on holidays. Plus, food truck food is often very good.

Having sales tax included in the listed price also streamlines service. You see the price, you produce the money—no surprises. If sales tax isn’t included, or if there’s no sign to indicate that sales tax is included in the price, confusion can arise.

Confusion can arise for the seller, too, especially when the place of sale changes frequently. A day spent selling throughout the County of Los Angeles could expose a mobile food truck vendor to five different rates:  7.50%, 8.00%, 9.00%, 9.50%, and 10.00%. The California State Board of Equalization (BOE) expects the correct rate to be applied to each transaction.

This “confusion on the amount of tax to charge customers when sales are made” must be a recurring problem in California. As a result, the BOE has taken action. Last week, a BOE news release announced: BOE Action Simplifies Pricing for Mobile Food Truck Items.

The notice explains that the BOE has streamlined “pricing for mobile food vendors by changing a regulation to presume that sales tax is included in the listed price of the food.”

As the law now stands, food truck operators are required to “post signs stating that sales tax is included in the listed price.” If they don’t include sales tax in the listed price, they must calculate tax for every sale. It’s one thing to calculate sales tax from a fixed location, where the rate rarely changes. It’s another thing to sell from multiple locations, each with different tax rates. Will you remember to apply the appropriate tax to each transaction? Will your employees?

Once the new regulation takes effect, mobile food truck operators will be able “to charge the same price no matter where they are, and later calculate how much tax they owe for the locations where the sales were made.” If all goes according to plan, the regulation should take effect July 1, 2014.

Bon appetit!

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.