Wyoming: The Taxation of Prepared Food and Related Services
- Jul 17, 2014 | Gail Cole
The Wyoming Department of Revenue has updated Sales Tax Guidelines for the Restaurant Industry. It explains how sales tax applies to prepared food, and how to tax many of the situations that arise when food is prepared.
Wyoming provides an exemption from sales tax for “food for domestic home consumption.” However, prepared food sold to the public is subject to Wyoming sales tax, no matter where it's sold. Prepared food includes food sold at restaurants (both dine-in and take-out) and catered food. It is also defined as:
- “Food sold in a heated state or heated by the seller”
- “Two or more food ingredients mixed or combined by the seller for sale as a single item”
- “Food sold with eating utensils provided by the seller, including plates, knives, forks, spoons, glasses, cups, napkins, or straws. A plate does not include a container or packaging used to transport the food.”
Warm nachos purchased at a gas station or convenience store are subject to sales tax. A single cheese stick sold at the same place may not be.
The 75/25 policy
Many businesses sell both taxable and exempt foods. In this event, sellers must adopt a 75/25 policy: if 75% or more of food sales are prepared food, “the vendor must impose sales tax on all food sales”--with one multiple serving exception.
The multiple serving exception
An item containing four or more servings that is packaged as one item and sold for a single price is not considered a prepared food and is not subject to sales tax. Examples include:
- A one-pound bag of coffee
- A six-pack of soda
- A package of one dozen donuts
- A whole cake or pie
Meals provided at no cost to employees and managers for consumption on the premises are exempt from sales tax. However, if there is any charge for these meals, those charges are taxable.
Coupons, Groupons, and specials
Sales tax is based on the actual price of the sale. If that price is voluntarily lowered by the business, sales tax is based on the lowered price.
Groupons and LivingSocial discounts function differently from business-provided coupons because they involve a third-party (typically an out-of-state social media coupon company). Nonetheless, tax is still based on the actual purchase price: “The retailer typically collects and remits tax based on the reduced price.”
However, if the coupon/groupon/etc “does not indicate the purchase price of the coupon along with the face value of the coupon, tax is calculated on the full purchase price of the product or service.” In other words, if the coupon says something like “half-price meal” (with no $ amount) and the full price of the meal is $100, tax on the full $100 would be applied.
Both mandatory and voluntary gratuities (tips) on meals are exempt from Wyoming sales tax, effective July 1, 2013.
Other topics covered in the departmental publication include:
- Alcohol and other beverages
- Customer satisfaction
- Live entertainment
- Wholesale items
Interested in all the details? Grab some take-out (taxed!) and dig into Sales Tax Guidelines for the Restaurant Industry.
Or switch to an automated sales tax solution and treat yourself to dinner out.