Audits are on the way for Food Delivery Services

    With so many staying home due to the COVID-19 pandemic, there is a steep rise in demand for food delivery services. Different companies are available in most major markets, but all of them are seeing a boom in business. For some restaurants, it is the only way they can try to stay afloat. When any industry sees major growth, state tax agencies are always ready to take a close look at their accounting practices.

     One focus of many agencies will be taxes related to marketing, delivery, and processing fees. Are they being collected and paid? Since almost every state and most cities have different laws, this is a concern that must be addressed. This is similar to the situation that Online Marketplaces found themselves in 5 years ago when the US Supreme Court ruled that they must collect and pay Sales Tax wherever their items are bought, even if they do not have a physical presence in that state. Food delivery services may begin to have each transaction taxed in different ways, according to the area they operate in.

     When it comes to food service, there are different factors to consider. Is the food hot or cold? Is it prepared to go, or delivered? Are they really food resellers under the law? These are questions that need to be answered and there are many cash hungry states that will be eager to find out.

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