Restaurant Taxation: Calculating Tips and FICA Tip Credit; Food Donations, Sales Tax, QIP, and CARES Act Relief

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A


Conducted on Wednesday, August 19, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will discuss taxation issues unique to restaurants, including calculating and reporting tips, the enhanced deduction for food inventory, remitting sales tax, and the FICA tip credit as well as the application of recent relief under the CARES Act to the food industry.

Description

The IRS makes it clear that "all cash and non-cash tips an employee receives are income and are subject to federal income taxes." However, capturing, recording, and reporting tips is difficult. Employees are required to complete daily tip records; employers must accumulate, report, tax, and remit taxes on the same. If reported tips are less than 8%, some establishments must allocate any difference to employees.

Sales tax considerations are immense. With 45 states and D.C. requiring the collection of sales tax, and local taxes too, charging, reporting, and remitting these taxes is challenging. In addition to each state and jurisdiction having its tax rate, there most often are varying rates charged for service, tangible goods, liquor, and take-out. Missing deadlines and payments can result in significant penalties. Restaurants, an industry with high cash sales, are often targeted by states for sales tax audits.

In addition to unique challenges, significant tax benefits are available to restaurants. These businesses receive an enhanced tax deduction for food donations and a lucrative FICA tip credit. They are an industry that readily benefits from cost segregation and specific relief in the CARES Act, including the QIP correction.

Listen as our panel of restaurant experts helps alleviate taxing issues related to restaurant ownership. They will cover how to claim the FICA tip credit, best practices for capturing and reporting sales tax and tips, and CARES Act relief applicable to restaurants.

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Outline

  1. Restaurant taxation: an overview
  2. Reporting tips
  3. FICA tip credit
  4. Food donations
  5. Sales tax
  6. Cost segregation
  7. CARES Act relief

Benefits

The panel will cover these and other important issues:

  • How to report and claim the FICA tip credit
  • How restaurants can benefit from the recent QIP correction
  • What qualifies for the enhanced deduction for food donations
  • Which restaurants would benefit from a cost segregation study
  • Best practices for capturing and reporting employee tips

Faculty

Hagan, Jean
Jean Hagan

Principal
KROST

Ms. Hagan has owned, operated, and consulted in the restaurant industry for more than 30 years. During that time, she...  |  Read More

Iwanoff, Lindsay
Lindsay Iwanoff
Tax Manager
KROST

Ms. Iwanoff is a Tax Manager in the firm’s Restaurant Practice Group, with a focus on tax and consulting services...  |  Read More

Wong, Aric
Aric Wong, CPA, MBT

Tax Manager
KROST

Mr. Wong's areas of expertise include tax planning and compliance for high net-worth individuals, partnerships, and...  |  Read More

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