34 Tex. Admin. Code § 3.1001 - Mixed Beverage Gross Receipts Tax
(a) Definitions. The following words and
terms, when used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1)
Alcoholic beverage--Alcohol, or any beverage containing more than 0.5% of
alcohol by volume, which is capable of use for beverage purposes, either alone
or diluted.
(2) Bad debts--The
unpaid portion of the gross receipts on sales or services of mixed beverages
that are uncollectible by the permittee.
(3) Cash or ticket bar--A bar at a special
function at which guests can purchase alcoholic beverages.
(4) Complimentary alcoholic beverage--An
alcoholic beverage served without any consideration paid to the
permittee.
(5) Mandatory gratuity
charge--Any amount required by the permittee in excess of the charge for the
sale of alcoholic beverages.
(6)
Mixed beverage--A serving of a beverage composed in whole or in part of an
alcoholic beverage in a sealed or unsealed container of any legal size for
consumption on the premises where served or sold by a permittee.
(7) Open bar--A bar at a special function at
which alcoholic beverages have been paid for by the host or are prepaid through
an admission fee. This differs from the provision of complimentary alcoholic
beverages in that the alcoholic beverages are purchased by the host or donated
to the host for the purpose of being served for free at the special
function.
(8) Permittee--A person
who holds any of the following permits issued by the Texas Alcoholic Beverage
Commission: a mixed beverage permit, private club registration permit, private
club exemption certificate permit, private club registration permit with a
retailer late hours certificate, nonprofit entity temporary event permit,
private club registration permit with a food and beverage certificate, mixed
beverage permit with a late hours certificate, mixed beverage permit with a
food and beverage certificate, or distiller's and rectifier's permit. The term
includes an agent, servant, or employee of that person.
(9) Qualified employees--Employees who
customarily and regularly provide the service upon which a gratuity is based,
including, but not limited to, waiters, waitresses, busboys, service
bartenders, wine stewards, and maîtres d'hôtel. The term does not
include janitorial help, chefs, cashiers, or dishwashers.
(10) Reasonable mandatory gratuity charge--A
mandatory gratuity charge that does not exceed 20%.
(11) Source record--A dated customer service
check or ticket; a dated cash register receipt, if coded to reflect all
information required by subsection (k) of this section; or the equivalent of a
dated customer service check or a dated cash register receipt, subject to
approval by the comptroller.
(12)
Temporary membership card--A card printed and sold to a private club by the
Texas Alcoholic Beverage Commission to be sold by the private club to an
individual that entitles the individual to all the privileges of membership in
the private club for a period not to exceed three days. The card also entitles
the holder to bring not more than three persons into the private club as the
holder's guests.
(13) Voluntary
gratuity--An amount added to the bill by the purchaser or money given freely by
the purchaser over and above the price charged for the sale or service of
alcoholic beverages.
(14) Walked
checks or tabs--An industry term that refers to the instance of a customer that
on a particular business day consumes alcoholic beverages and leaves the
permittee's premises without paying or providing the appropriate consideration
for the alcoholic beverages. These differ from bad debts in that no agreement
exists to extend credit to the customer; and these differ from complimentary
alcoholic beverages in that the intent is to sell the alcoholic beverages and
not be given away as complimentary alcoholic beverages.
(b) Mixed beverage gross receipts tax.
Effective January 1, 2014, the rate of the tax is reduced from 14% to 6.7%. The
tax is imposed on the gross receipts of a permittee received from the sale,
preparation, or service of alcoholic beverages or from the sale, preparation,
or service of ice or nonalcoholic beverages that are sold, prepared, or served
for the purpose of being mixed with an alcoholic beverage and consumed on the
premises of the permittee. The mixed beverage gross receipts tax is imposed in
addition to the mixed beverage sales tax imposed under Tax Code, Chapter 183,
Subchapter B-1 (Mixed Beverage Sales Tax).
(1)
Gross receipts tax imposed on permittee, not customer. The mixed beverage gross
receipts tax is a tax on gross receipts. The tax may not be separately charged
to or paid by the customer and cannot be considered included in the gross
receipts amount. A receipt, bill, or other invoice for the sale or service of
alcoholic beverages may not include a charge labeled a "Tax
Reimbursement."
(2) Monthly mixed
beverage gross receipts tax reports. Each permittee must file a monthly mixed
beverage gross receipts tax report on or before the 20th day of the following
month even if no sales or services of alcoholic beverages were made during the
month. The Texas Mixed Beverage Gross Receipts Tax report is due in addition to
the Texas Mixed Beverage Sales Tax report required to be filed under Tax Code,
Chapter 183, Subchapter B-1, and the Texas Sales and Use Tax report required to
be filed under Tax Code, Chapter 151 (Limited Sales, Excise, and Use
Tax).
(3) Separate tax disclosure
statement. For informational purposes only, a permittee may add a separate
statement on a customer's invoice, bill, or other receipt that is not shown as
part of the charges to the customer and that clearly discloses:
(A) the amount of mixed beverage gross
receipts tax to be paid by the permittee to the comptroller on that sale;
or
(B) the total amount of mixed
beverage gross receipts tax to be paid by the permittee to the comptroller
combined with the amount of mixed beverage sales tax collected by the permittee
to be remitted to the comptroller on that sale.
(c) Taxable mixed beverage gross receipts.
(1) The mixed beverage gross receipts tax
base includes, but is not limited to, receipts for the following items:
(A) receipts from the sale or service of
alcoholic beverages;
(B) receipts
from the sale or service of nonalcoholic beverages that are mixed and consumed
with alcoholic beverages on the permittee's premises;
(C) receipts from cover charges, door
charges, entry fees, or admission fees when the Texas Alcoholic Beverage
Commission has determined that the collection of the cover charge, door charge,
entry fee, or admission fee is in violation of the Texas Alcoholic Beverage
Commission rules or regulations. In this instance the tax base is the entire
receipts from the cover charge, door charge, entry fee, or admission fee plus
the reduced sales or service prices received for the alcoholic
beverages;
(D) the normal selling
price of alcoholic beverages served with meals with no separate charge. If the
specific alcoholic beverage is being sold or served at a reduced price at the
same time as the meal, the tax base for the alcoholic beverage is the reduced
price;
(E) any portion of a
reasonable mandatory gratuity charge that is not disbursed to qualified
employees;
(F) the entire mandatory
gratuity charge when in excess of 20%, regardless of how the gratuity is
disbursed;
(G) miscellaneous
charges in conjunction with the sale or service of alcoholic beverages such as
bar set-up fees, bartender fees, corkage fees, maîtres d'hôtel
charges, etc.;
(H) all sales or
services of alcoholic beverages by caterers; and
(I) all sales of coupons, tokens, tickets,
etc., that are redeemed or used in any manner to purchase or pay for the sale
or service of an alcoholic beverage.
(2) Thefts of money or legal tender received
from the sale or service of alcoholic beverages are not deductible from the
mixed beverage gross receipts tax base.
(d) Private clubs, special events, and
functions. The gross receipts from alcoholic beverages served at special events
or functions, such as golf or tennis tournaments at private clubs when a
lump-sum charge entitles the member or guest to various items such as green
fees, food, alcoholic beverages, golf cart rentals, etc., shall be computed by
one of the following methods.
(1) The club
shall maintain documentation that shows the normal cost to a member or guest
for each of the items provided for the lump-sum charge. The permittee may then
compute the percentage of the total of all the charges attributable to the sale
or service of the alcoholic beverages. This percentage is then applied to the
actual lump-sum amount paid by the member or guest to determine the amount of
gross receipts subject to the mixed beverage gross receipts tax. For example,
if the total of all the items would normally cost $300 and the permittee
estimates that the portion attributable to the sale or service of alcoholic
beverages is $30, then 10% of the actual lump-sum amount would be reported as
subject to the mixed beverage gross receipts tax. If the lump-sum amount paid
by the member or guest is $200, then the mixed beverage gross receipts tax base
would be $20. The documentation used by the permittee is subject to review by
the comptroller's personnel and any amounts determined to be inaccurate or
unreasonable may be adjusted.
(2)
The permittee may choose to use the normal sales or service prices of the
alcoholic beverages as the tax base for the mixed beverage gross receipts
tax.
(e) Nonprofit
organizations holding fundraising and other special events where 100% of the
net profit of the event goes to the nonprofit organization. Nonprofit
organizations with an IRS Section 501(c)(3), (4), (8), (10), or (19) status who
are permittees, are responsible for paying the mixed beverage gross receipts
tax as follows:
(1) if tickets are sold to an
event with an open bar, the nonprofit organization owes mixed beverage gross
receipts tax on the cost to the organization of any alcoholic beverages
purchased for the event;
(2) if
tickets are sold to an event with an open bar and the alcoholic beverages are
donated to the nonprofit organization, the nonprofit organization does not owe
mixed beverage gross receipts tax or use tax as provided by Tax Code, Chapter
151, on the donated alcoholic beverages, but owes mixed beverage gross receipts
tax on the cost of any alcoholic beverages purchased for the event;
(3) if an event is one with a cash or ticket
bar (with or without an entry fee), the nonprofit organization owes mixed
beverage gross receipts tax on the total receipts from the sale and service of
alcoholic beverages;
(4) if an
event is one with no entry fee and an open bar, the nonprofit organization does
not owe mixed beverage gross receipts tax, but owes use tax as provided by Tax
Code, Chapter 151, on the cost of any alcoholic beverages purchased by the
organization for the event.
(f) Items excluded from the mixed beverage
gross receipts tax base. The mixed beverage gross receipts tax does not apply
to receipts for the items described in this subsection.
(1) Complimentary alcoholic beverages. Use
tax as provided by Tax Code, Chapter 151, is due on the taxable ingredients of
the complimentary alcoholic beverages. A serving of an alcoholic beverage shall
not be a complimentary alcoholic beverage if any consideration is paid to the
permittee, which may include, but is not limited to, the following: the
alcoholic beverage is served in connection with food or any other thing sold to
the recipient or an entertainment or entry fee is charged that includes one or
more drink coupons or tickets. Any alcoholic beverage served under the
identified or similar conditions is subject to the gross receipts tax, computed
on the basis of the normal charge for the sale or service of such alcoholic
beverage.
(2) Complimentary
alcoholic beverages served during promotional periods such as happy hours at
hotels or motels. If, however, there is an increase in guest room rates
attributable to the promotional periods, the comptroller will have the option
to tax either the increase in the room rate under Tax Code, Chapter 156 (Hotel
Occupancy Tax), or assess use tax on the taxable ingredients of the
complimentary drinks. The comptroller will have the authority to use
information such as the room rates at comparable hotels and motels in the area
to determine if an increased rate is attributable to the promotional period of
alcoholic beverages.
(3)
Complimentary alcoholic beverages served to holders of free drink cards or free
drink tokens, for which no consideration was paid to the permittee.
(4) Voluntary gratuities.
(5) Reasonable mandatory gratuity charges,
subject to the requirements of subsection (i)(1) of this section.
(6) Walked checks or tabs.
(7) Receipts from cover charges, door
charges, entry fees, or admission fees that are for entertainment, food
specials, and other purposes, and receipts from the sale of temporary
membership cards. Sales tax as provided by §
3.298 of this title (relating to
Amusement Services) is due on these receipts.
(8) Alcoholic beverages sold by a permittee
for off-premises consumption.
(9)
Bad debts. For more information on bad debt refunds or credits, refer to
subsection (n) of this section.
(10) Mixed beverage sales taxes. Mixed
beverage sales taxes are not part of the mixed beverage gross receipts tax
base. A permittee who sells mixed drinks with mixed beverage sales tax included
in the sales price should deduct the mixed beverage sales tax before
calculating the mixed beverage gross receipts tax base.
(g) Alcohol loss. No mixed beverage gross
receipts tax is due on alcoholic beverages destroyed due to spillage or
breakage.
(h) Inventory for
cooking. No mixed beverage gross receipts tax is due on alcoholic beverages
used in cooking.
(1) Purchases. Purchases of
alcoholic beverages used in cooking must be documented either:
(A) by purchase invoices that have such
beverages clearly denoted by either the seller or purchaser; or
(B) by separate purchase invoice.
(2) Storage. Alcoholic beverages
used in cooking may be stored with regular bar stock or in a separate storage
area.
(3) Use. The withdrawal from
inventory of alcoholic beverages used in cooking must be recorded at the time
of withdrawal on a service check or other permanent source record. Use tax as
provided by Tax Code, Chapter 151, is not due on alcoholic beverages used in
cooking.
(i) Mandatory
gratuity charges.
(1) Reasonable mandatory
gratuity charges are excluded from the mixed beverage gross receipts tax base
if they are:
(A) separated from the sales
price of the alcoholic beverage served;
(B) identified as a tip or gratuity by any
reasonable means, including such terms as service fee or service charge;
and
(C) disbursed to qualified
employees. Any portion of a reasonable mandatory gratuity charge that is
retained by the employer is included in the mixed beverage gross receipts tax
base.
(2) Mandatory
gratuity charges in excess of 20%. If a mandatory gratuity charge exceeds 20%
then the entire mandatory gratuity charge is included in the mixed beverage
gross receipts tax base regardless of how the gratuity is disbursed.
(j) Record requirement. Records
required by the comptroller for mixed beverage permittees must be kept for a
minimum of four years and throughout any period in which any tax, penalty, or
interest may be assessed, collected, or refunded by the comptroller, or in
which an administrative hearing or judicial proceeding is pending. Records must
be made available upon request within a reasonable time for examination by the
comptroller or authorized agents or employees. The records, in general, must be
contemporaneous and must reflect the total gross receipts from the sale or
service of alcoholic beverages and those associated services that are subject
to the gross receipts tax, as provided by subsections (c), (d) and (e) of this
section. Records may be written documents or their electronic equivalents.
Permittees must contact the Texas Alcoholic Beverage Commission for information
concerning Texas Alcoholic Beverage Commission record keeping
requirements.
(k) Source records.
(1) The information described in this
subsection is required to be printed on a source record in a manner that makes
such information clearly evident or by a system of symbols (codes) if such
symbols and their meaning are printed on the source record or maintained on the
licensed premises.
(A) Each individual serving
of an alcoholic beverage and the price charged. When using service checks, it
is permissible to make one entry on a service check for more than one
individual serving if all of the servings are of the same type (e.g., 3 Scotch
& Water @ $2.00 = $6.00). If all of the servings are not of the same type,
a separate entry must be made on the service check for each type of service
(e.g., 3 Scotch & Water @ $2.00 = $6.00, 2 Rum & Coke @ $2.00 = $4.00).
When using a cash register only, regardless of the type of service, each
individual serving must be rung up separately. When using a combination of
service checks and a cash register, it is not necessary to itemize each serving
on the cash register tape if all the required information is shown on the
service check.
(B) For an alcoholic
beverage not served as an individual separate serving, the unit of the serving
used and the price charged. When using service checks, units of servings that
are more than an individual separate serving shall be recorded as such (e.g., 2
pitchers of a malt beverage @ $3.25 = $6.50, 1 pitcher of daiquiri @ $6.00 =
$6.00). When using a cash register only, each unit of serving which is more
than an individual separate serving must be rung up separately, with the price
list identifying the unit of serving. When using a combination of service
checks and a cash register, it is not necessary to itemize each serving on the
cash register tape if all the required information is shown on the service
check.
(C) Each separate serving or
other unit shall be clearly identified as to the kind of drink (e.g., daiquiri,
tequila sunrise) or class of beverage (e.g., malt beverage, wine, whiskey). If
a cash register does not have sufficient keys for the classification, the price
list used for identifying the units of servings must also identify the kinds of
servings.
(D) The date of the
transaction. For this purpose the "date" begins as of 3:00 a.m. one day and
continues until 3:00 a.m. the next day.
(E) Complimentary alcoholic beverages, which
shall be recorded on service checks only. A check must be prepared for each
individual or party served. The check should be prepared as if the service of
the complimentary alcoholic beverage was a normal sale and then clearly marked
as being complimentary. The service checks should be grouped daily and filed
with the daily summary showing the information on the summary as required by
subsection (l) of this section.
(F)
Mandatory gratuity charges that exceed 20% of the charge for alcoholic
beverages must be recorded and identifiable on a source record. A reasonable
mandatory gratuity charge must be recorded and identifiable on the source
record only if the gratuity is disbursed to recipients other than qualified
employees, including, for example, owners, club managers with no direct
involvement in the particular event, janitorial help, chefs, cashiers, and
dishwashers. Voluntary gratuities are not to be recorded on a source
record.
(2) Source
records shall be maintained in sequence by date.
(l) Daily Summaries. Each permittee must
maintain a daily summary that includes the following information:
(1) all information required to be recorded
on source records;
(2)
complimentary alcoholic beverages dispensed, showing the number of services,
type of service, kind of drink, and normal selling price;
(3) alcoholic beverages that were lost
through theft, showing the number of containers lost by size, brand, and class.
The theft must be reported to the proper police department and must be
substantiated by the report of such police department;
(4) alcoholic beverages that were lost
through a disaster, showing the number of containers lost by size, brand, and
class. The disaster must be reported to the comptroller;
(5) alcoholic beverages that were lost
through breakage or spillage, showing the number of containers lost by size,
brand, and class or type of drink and size. A written report must be prepared
at the time of the loss;
(6)
alcoholic beverages that were lost through the cleaning, servicing, or repair
of dispensing equipment lines, showing the amount lost by class or type of
drink and supported by:
(A) reports prepared
by the permittee at the time of the malfunction; or
(B) repair/service invoices prepared by the
repair/service company;
(7) alcoholic beverages taken from inventory
for use in cooking;
(8) cover
charges, door charges, entry fees, or admission fees. Cover charges, door
charges, entry fees, and admission fees are subject to sales tax as provided by
§
3.298 of this title, unless the
Texas Alcoholic Beverage Commission determines that the cover charges, door
charges, entry fees, or admission fees collected are in violation of the Texas
Alcoholic Beverage Commission rules or regulations; and
(9) information pertaining to changes made
during the month concerning prices, glass sizes, bulk machine (e.g., margarita
machine) recipes, ounces per serving, parties, or promotions.
(m) Purchase invoices.
(1) A record of all alcohol and alcoholic
beverages purchased or received showing the date, the name and address of the
person from whom purchased or received, the location from where shipped, the
location received, the quantity and kind of beverage (brand and class)
received, and the total price paid for each brand and class received.
(2) Alcoholic beverages used in mixing drinks
as the secondary ingredient (e.g., vermouth, triple sec) must be supported by
purchase invoices which have such beverages clearly denoted by the
purchaser.
(n) Bad debts
refund or credit.
(1) A permittee may take a
credit against taxes to be paid to the comptroller or claim a refund on taxes
paid to the comptroller for bad debt on sales if the permittee:
(A) determines that the unpaid portion will
be uncollectible;
(B) enters the
unpaid portion of the sales gross receipts on their books as a bad debt; and
(C) claims the bad debt as a
deduction for federal tax purposes during the same or subsequent reporting
period.
(2) To establish
bad debt credit or refund, a permittee's records must show:
(A) date of sale or service;
(B) name and address of purchaser;
(C) source records of sale or
service;
(D) evidence that the
gross receipts tax was paid to the comptroller;
(E) all payments or credits applied to the
account of the purchaser;
(F) a
designation that the account is a bad debt; and
(G) evidence that the account has been or
will be claimed as a bad debt deduction for federal income tax purposes.
(3) To determine the
amount of bad debt allowance for tax, all payments or credits in reduction of a
customer's account must be applied ratably between alcoholic beverages and
other goods sold to that customer.
(4) If all or part of the amount claimed as a
bad debt is later collected, the amount collected must be reported as a taxable
receipt in the reporting period in which the collection was made.
(5) Accounts may not be labeled as a bad debt
for the purpose of delaying the payment of the mixed beverage gross receipts
tax.
(o) Audit and
examination of tax account.
(1) Determination
of tax liability. In examining the tax account of any permittee, the
comptroller may compute and determine the amount of gross receipts tax
liability based on reports filed with the comptroller, records or information
obtained from the permittee, records or information obtained from any seller
who furnished alcoholic beverages to the permittee, or such other information
as may come to the attention of the comptroller. The comptroller presumes that
the disposition of all alcoholic beverages purchased by the permittee is
taxable until established otherwise.
(2) Access to all information. The
comptroller may examine all books, records, papers, documents, supplies, and
equipment of a permittee. Additional records that may be required to be
presented include, but are not limited to, the following:
(A) all procedure and operation manuals;
(B) all financial ledgers,
journals, and registers;
(C) all
financial statements prepared internally or by an outside bookkeeper,
accountant, or certified public accountant;
(D) all bank statements;
(E) all federal income tax returns; and
(F) all state and federal
employment tax returns and supporting documents.
(3) Failure to maintain or make records
available for audit. In examining the tax account of each permittee, if the
comptroller finds that the permittee has failed to maintain or make available
the records required by any regulation of the comptroller, the comptroller may
compute and determine the amount of the gross receipts tax liability from any
available source or records, and estimates of the tax liability may be made by
use of any available records for any period for which the permittee has failed
to maintain records or file a report with the comptroller. In the event records
are not made available, the comptroller will presume all alcohol purchased was
sold. In the absence of records or evidence to the contrary, the comptroller
may use an average pour size of 1.25 ounces for liquor; 16 ounces for a malt
beverage; and 6 ounces for wine.
Notes
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