Running a Concession Stand? 5 Sales Tax Guidelines
- June 18, 2015 | Stephanie Faris
Summer brings families out to softball and soccer fields, where they hone their skills and play to win. The athletics continue well into the fall, when schools and local leagues kick off football season with a vengeance. All of this sportsmanship works up an appetite.
Over the years, concession stands have become a staple of almost every sporting venue, from peewee leagues to NFL games. While snacks and beverages can bring in big bucks for concession stand vendors, collecting sales tax from each customer can be tricky. Here are a few things you should know before you set up at the next event.
1. Sales tax laws vary
Local and state governments set sales tax laws, so the law varies from one state--and even one city--to another. If you’re setting up a concession stand, it’s important to research the laws as they apply to your own state and the sales tax rates that apply to the location of your stand.
2. Fundraising events may not be taxed
If your concession stand is set up as part of a fundraising event, you may not be required to charge sales tax on purchases made there. The exception to this is if you purchased the items for resale as sales-tax exempt. But if you paid tax on your items at the time of purchase, you may then be able to resell them without paying sales tax, depending on your local laws.
3. School concession stands may be exempt
In addition to sporting events, schools often set up concession stands to sell items to students during lunch and breaks. If all proceeds from concession stand sales go to the school, the sales may be tax exempt. However, if a for-profit organization is chosen to sell items in the school and keep the proceeds, each item will likely need to be taxed.
4. Isolated events may not apply
In some states, isolated and occasional sales exemptions apply. This means if you only set up your concession stand at one or two events throughout the year, you may not be required to pay sales tax on the items you sell there. There are other stipulations, so it’s important to check closely into your local laws as they apply to your own situation.
5. Sellers are responsible for taxes
While customers are the ones charged sales tax on the items they purchase, the responsibility for paying that tax falls on the business. This means a concession stand operator can choose to either add the sales tax into the price advertised on its sign or charge it on top of the final purchase. Some concession operators round up to make things easier for its cash-based customers. At the end of the month, operators must report and pay all sales tax collected to the state as dictated by local laws.
If you’re a concession stand operator, you probably are responsible for paying sales tax for each item you sell. To get the specifics of your local laws, you’ll need to research sales and use tax laws in your area, or use a service like AvaTax to calculate them for you.
While the responsibility ultimately falls on concession stand operators, local government representatives will generally walk businesses through what they need to do to collect and pay taxes on purchases.