For time and memorial, New York City Restaurants have been
the Darling of the Tax Department. And now (thanks to reality television and
the proliferation of celebrity owned restaurants) over zealous tax collectors
are cashing in on the Craze, says David Selig of Selig & Associates. But
celebrities aren’t the only one’s who are feeling the pinch, says Selig. For
example, a
tasty little Curry House on the Upper East Side was recently closed by the Tax
Department because it owed less than $400 Thousand in sales and corporate
taxes. A few days later, the Tax Department seized another restaurant in the
East Village; then padlocked a yummy Pizza franchise in the Bronx. Then it was
back to Chelsea to shutter another Pizzeria that allegedly owed $122K in
Unpaid Taxes; then back up town to kill a few more dreams. Ironically, says
Selig, almost all sales tax controversies are resolvable, provided the owners’
get involved early on. Moreover, now that so many celebrities and professional
athletes have bought into New York City restaurants, the opportunities to
settle have increased exponentially. Unfortunately when it comes to tax
controversies, most athletes and entertainers are poorly represented. I suspect
it’s because their attorneys and accountants don’t regularly practice before
the IRS and State Tax Department, and don’t really understand how the system
works, says Selig.
Understanding the Rules:
Generally, food sold at food
stores is taxable when sold under any of the following conditions:
It is sold heated;
It is sold for consumption on the premises;
or
It has been prepared by the seller and is
ready to be eaten, whether for on premises or off premises consumption.
Also, the following categories of food are taxable:
Sandwiches (whether heated or unheated),
Carbonated beverages,
Candy and confectionery, and believe it or
not,
Pet
foods.
Heated foods: All food that is sold in a heated state is
taxable. This includes food that is cooked to order and food that is kept warm
using heat lamps or other warming devices. Examples of these foods are:
Hot pizza, hot soup, hot rotisserie chicken,
warm roasted nuts, and warm pretzels;
Fish cooked to order at the seafood counter;
and
Food sold at a hot buffet in the store.
Food sold for consumption on the premises
Food sold that may be eaten at an eating area (i.e., an
area with tables and seating) in the store or just outside the store is
taxable. This includes food sold at a:
Restaurant or similar establishment,
Convenience store,
Coffee shop within the store,
Food court,
Salad bar or snack bar,
Concession stand, or hot or cold buffet.
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