FYI -State of Calif. says MUST chg. sales tax on deliveries!

All Calif operators should be aware of this situation - here’s the result of today’s conversation with legal department of California’s sales tax authority (the SBOE or State Board of Equalization) :

  1. Existing law says pizza delivery fees ARE taxable (reg 1628). It’s complicated and doesn’t make a lot of common sense, but it boils down to who “owns” the pizza at the time of delivery. The SBOE says that the operator owns it until it sits in the customers hands and so the delivery fee is taxable. Even if the order is prepaid.

  2. They will collect taxes back as far as 3 years on all delivery fees.

I had no idea. Neither did my accountant. Pretty scary stuff.

Re: FYI -State of Calif. says MUST chg. sales tax on deliver

. Existing law says pizza delivery fees ARE taxable

Yes, delivery fees ARE taxable. It’s a service you provide to the customer and all services are taxed. If your accountant didn’t know this he/she really dropped the ball. Actually, your POS system should account for deliveries and tax them. Are you sure you haven’t been paying taxes? -J_r0kk

Re: FYI -State of Calif. says MUST chg. sales tax on deliver

No, our POS system is not set up to collect taxes on delivery. We’ve changed it at this point (as of yesterday), but no it wasn’t automatic.

I called every delivery restaurant in my yellow pages yesterday. None of them charge taxes on delivery fees.

Re: FYI -State of Calif. says MUST chg. sales tax on deliver

First, yes - to my knowledge you’re right.
Second - I will bet you a dollar if you actually ORDER a pizza delivered from each place in the yellow pages that half of them DO tax the delivery fee. The people you asked probably had no clue and gave you the answer they thought you’d want to hear.