Restaurants often comp their employees a free meal per shift. It’s a good way for the staff to get to know the menu and it’s a nice perk in an industry where wages tend to be low. But for restaurant owners in Washington State, free meals come with a side of tax complications.
The Washington State Department of Revenue has recently issued a special notice regarding the complimentary meals restaurants provide to employees. It reveals that legislation taking effect on July 24, 2015, “clarifies that the exemption from sales, use and business & occupation (B&O) taxes only applies to meals provided to restaurant employees for free.”
Under Section 302ff of Substitute Senate Bill 5275, “meals provided by a restaurant without specific charge to its employees” are exempt from sales and use tax and the B&O tax. Language has been changed to reflect the fact that free meals provided to someone else’s employees could be subject to tax.
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