Service Charge Tax

Posted on: March 23, 2017 | Categories:

We are required to charge sales tax on our service charge and labor fees. Below is the ruling and explanation by the Missouri department of Revenue: "Mandatory service charges are subject to Missouri sales tax. It does not matter whether or not the service charges are separately stated on the billing invoice.

Applicant collects a service charge on the total charges for food and beverages provided in its catering business. The service charge is a mandatory gratuity billed to and paid by each customer. Mandatory gratuities are part of the sale of the food and drink and subject to sales tax."