Form Pub. Ks-1540 - Kansas Business Taxes For Hotels Motels & Restaurants Page 13
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42purposes of this special state guest tax is any
Employee Meals
establishment that has more than eight bedrooms (i.e.,
nine or more sleeping rooms). The state transient guest
Free meals furnished to employees of public eating
tax rate in an area designated as a redevelopment district
places are not taxed if the employee’s work is
is 5% of the gross receipts derived from or paid by
related to the furnishing or sale of such meals.
transient guests for sleeping accommodations.
This is a specific exception or exemption found in K.S.A.
79-3606(j).
When this guide was published, no redevelopment
districts had been established. When a redevelopment
Free meals furnished to employees not employed
district is established, hotels located within that district
by the restaurant, or given away to customers, are
will be notified by KDOR of the tax and the steps to take
subject to tax based upon your cost of the meal.
to register to collect, report and remit this special state-
Reduced cost employee meals are subject to tax based
imposed transient guest tax.
on the reduced price.
You allow your employees to eat one meal
free when they work more than four
RESTAURANT SALES
consecutive hours. These meals are not
subject to sales tax, even though the food
used to prepare them was purchased without sales tax.
The basic sales tax information discussed in the hotel
As a sales promotion, you give away four
section (starting on page 3 on this publication) is also
free meals each week to the winner of a
applicable to restaurants. The following material explains
business card drawing. These meals are
how sales tax applies to those situations and transactions
subject to sales tax based upon your cost
that are unique to your restaurant operations.
for each meal of $3.50, not the meal’s retail price of
$8.00 at the rate in effect at your restaurant.
MEALS AND NONALCOHOLIC DRINKS
You operate a hotel and a restaurant, and
allow all employees to eat one meal free
Kansas sales tax is imposed on the retail sale of meals
each day they are working. Only the
and nonalcoholic drinks furnished at any private club,
restaurant employees’ meals are not
drinking establishment, catered event, restaurant, eating
subject to tax. The meals of hotel staff (housekeeping,
house, dining car, hotel, drugstore or other place where
maintenance, front desk, etc.) are subject to sales tax
meals or nonalcoholic drinks are regularly sold to the
based upon your cost ($3.00) of each meal at the rate
public. The rate charged is the rate where the customer
in effect at your restaurant.
takes delivery/possession of the meal, drinks, etc.
NOTE: Report the cost of free meals in the merchandise
A Topeka, KS restaurant sells a buffet meal
consumed column of your sales tax filing (see page 21).
for $7.99 with a separate drink charge of
$0.99. Sales tax is due on $8.98 for 1 meal
A customer at your restaurant complains
and 1 drink at the Topeka rate of 8.95%.
about his dinner for which the menu price
is $16.99. To satisfy him, you reduce the
When meals and drinks are catered at another
price to $10, and provide a free dessert.
location, a restaurant will charge the state and local rate
The menu price of the dessert is $3.50, but your cost is
in effect at the location of the catered event.
$1.25. The customer will pay sales tax on the $10; the
restaurant will pay (accrue) sales tax on its cost for the
A Hays, KS restaurant is catering a
dessert of $1.25.
wedding in Ellis, KS. The restaurant must
charge the state and local sales tax rate
However, no sales tax is due on the cost of food that
for Ellis of 8.3% on its catering fee, rather
does not later become part of a meal sold due to
than the Hays, KS rate of 8.55%.
spoilage, waste, trimmings, etc. Although purchased
without tax, the food is not later used for a taxable
Sales Tax on Tips
purpose (i.e., sold or given away as a meal) and,
therefore, is not subject to sales tax.
Sales tax is due on the gross receipts received by
the restaurant on the sale of meals and nonalcoholic
Exempt Sales of Meals, Nonalcoholic Drinks and
drinks, including mandatory gratuities (tips). A tip that is
Miscellaneous Items
at the discretion of the patron is not subject to sales tax.
The entities listed on pages 4 and 5 may purchase
A restaurant adds an 18% gratuity to
meals and nonalcoholic drinks sold by restaurants
customers’ bills for groups of eight or more.
without tax. Restaurants making tax-exempt sales to
The bill for a party of ten came to $200
these exempt customers must obtain the appropriately
plus the 18% for a total of $236. Sales tax
completed sales tax exemption certificate from the entity
is due on the $236 ($236 X .063 = $14.87 sales tax).
to verify the exemption in their sales tax records.
13
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