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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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550.0000 Taxable Sales of Food Products—Regulation 1603
Annotation 550.0688
(d) Tips, Service and Cover Charges
550.0688 Allocation of Tips. A lump-sum charge is made for furnishing meals, drinks, and a river cruise. An allocation of the lump-sum charge is made between meals, tax, cruise, and tips. Where service charges are mandatory on purchases of food and drinks, these charges are included in taxable gross receipts. If the taxpayer can show that a specific percentage of the sum allocated to tips is, in fact, paid to ship personnel who do not prepare and serve meals or drinks, that percentage should not be includable in taxable gross receipts. 5/11/93.