Taxable parts of a customer’s bill
- Charges for food or drinks served
- Cover charges
- Service charges other than tips
- Charges to prepare or serve food, drinks and meals for customers who supply the ingredients
Nontaxable parts of a customer’s bill
- Tips that are all of these:
- Separately stated on the receipt
- Paid to the service provider as additional income
- Not used to avoid sales tax on the actual meal price
- Delivery charge that is both of these:
- Separately stated on the receipt
- Not used to avoid sales tax on the actual meal price
- Charges for playing games on tablets or similar devices.
Note: You don’t charge customers sales tax, but you do need to purchase amusement device decals.
Separate statement of sales tax
You must separately list the amount of tax on the receipt even if you want whole-dollar transaction amounts.
Example
If the final amount you charge for a drink is $3.00, the receipt would show:
| Drink | $2.83 |
| Sales Tax | $0.17 |
| Total | $3.00 |
Note: If you don’t separately state the tax, you charge tax on the whole-dollar amount (i.e, $3.00 x current sales tax rate = sales price).
Sometimes businesses with high-volume or even-dollar sales don’t automatically give receipts. But you must give your customers a receipt if they ask for it. A receipt, showing the amount of tax you charged, is the only proof they have to show they properly paid sales tax.
When you collect sales tax from customers for the State of Idaho, you must accurately track the tax you collect and forward it to the Tax Commission.
Food delivery fees and other charges
There are different types of meal delivery models, and the fees charged vary. Taxability depends on who the retailer is, what is charged, and how charges are shown on the invoice.
Example 1: Customer orders directly from restaurant
The restaurant sells $30 of food to the customer. It’s the retailer. It collects tax. The delivery company delivers food on behalf of the restaurant.
| Food | Taxable | $30.00 |
| Delivery fee | Not taxable | 4.99 |
| Tax | 1.80 | |
| Total | $36.79 |
Example 2: Customer orders directly from delivery service
The delivery company sells $30 of food to the customer and adds a 10% service charge. It’s the retailer. It collects tax. The delivery company buys food for resale from the restaurant.
| Food | Taxable | $30.00 |
| Service charge | Taxable | 3.00 |
| Delivery fee | Not taxable | 4.99 |
| Tax | 1.98 | |
| Total | $39.97 |
Example 3: Customer orders directly from delivery service
The delivery company sells $30 of food to the customer. It adds a 10% service charge and a surge charge because of high delivery demand. It’s the retailer. It collects tax. The delivery company buys food for resale from the restaurant.
| Food | Taxable | $30.00 |
| Service charge | Taxable | 3.00 |
| Delivery fee | Not taxable | 4.99 |
| Surge charge* | Not taxable | 2.99 |
| Tax | 1.98 | |
| Total | $42.96 |
*The surge charge is delivery-related.
Example 4: Customer orders directly from delivery service
The delivery company sells $8 of food to the customer. The food order is small, so the delivery company adds a small-order charge. It’s the retailer. It collects tax. The delivery company buys food for resale from the restaurant.
| Food | Taxable | $8.00 |
| Small-order fee* | Taxable | 2.00 |
| Service charge** | Taxable | 1.00 |
| Delivery fee | Not taxable | 4.99 |
| Tax | .66 | |
| Total | $16.65 |
*The small-order charge is food-related. **The service charge is 10% of the food cost.
- A tip added to a delivery fee isn’t taxable.
- If you’re a retailer, you must have a valid Idaho seller’s permit. You can’t collect sales tax without one. You can get a permit at no charge. See the Retailers guide.