Proposed Changes to Georgia Sales/Use Tax Could Save Restaurants Money

Darrin L. Friedrich

Wednesday, June 18th, 2014

Get ready, Georgia restaurant owners and operators, because the Georgia Department of Revenue may be about to save you some tax money.

Last month, the Georgia Department of Revenue announced a new set of proposed rules for sales and use tax as they pertain to restaurants and other establishments which sell prepared food, including coffee shops, cafeterias, catering establishments, taverns, and food trucks. If the regulations become law, several purchases you routinely make will no longer be subject to sales and use tax in the state of Georgia. So what is exempt from sales and use tax under the newly proposed regulations?

  • Disposable food packaging. Any packaging that is not re-used and simply contains food that is transferred to the customer will be exempt. That means the boxes, wrappers, cups, platters, lids and so forth that you buy to convey food to your customers would be tax-free purchases.
  • Items for sale, including tangible personal property. Food items and other articles of tangible personal property that you intend to resell to your customers would become exempt from sales and use tax. This provision includes toys sold as components of meals like you might see at a McDonald’s or Burger King.
  • Single-use items provided with meals sold. Any single-use items you provide or make available to your customers without charge are considered a component part of the meal. Thus, they too will become tax-exempt under the proposed regulations. This category includes items like straws, stirrers, napkins, forks, spoons, knives, chopsticks, tray liners and pre-moistened disposable clothes.
  • Food items provided with meals sold. Like the single-use items mentioned above, condiments and other food items that you provide without a separate charge are also considered to be a component part of a meal and would be tax-exempt under the proposed regulations. For example, complimentary tortilla chips and salsa like those often served in Mexican restaurants would be considered to fall under this rule, and the restaurant could then purchase the chips and salsa without paying sales or use tax.

Proprietors should also be aware that these proposed regulations include a provision stating that gratuities are subject to sales tax when they are negotiated in advance of a meal or are unilaterally added to the bill by the seller. Under this rule, automatic gratuities, like the common ones for large parties, will be subject to sales tax.

The Georgia Department of Revenue plans to consider the adoption of these regulations into law on June 19, 2014 and will accept comments electronically at until 10:00 a.m. that day. Stay tuned in the weeks to come to find out whether these regulations will become a permanent feature in Georgia’s restaurant community.

Looking for other ways to reduce your tax liabilities? Have questions about how the proposed regulations might affect your business? Contact Darrin Friedrich at or 404-898-8241.